UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2011
Commission File Number: 0-29901
Cavitation Technologies, Inc.
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10019 CANOGA AVENUE, CHATSWORTH, CALIFORNIA 91311
(818) 718-0905
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES
x
NO
¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES
x NO ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨ |
Accelerated filer ¨ |
Non-accelerated filer
¨
|
Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of February 10, 2012, the issuer had 159,624,586 shares of common stock outstanding.
TABLE OF CONTENTS
1
PART I - FINANCIAL INFORMATION
ITEM 1 - Consolidated Financial Statements
CAVITATION TECHNOLOGIES, INC.
See accompanying notes, which are an integral part of these financial statements
2
CAVITATION TECHNOLOGIES, INC.
See accompanying notes, which are an integral part of these financial statements
3
CAVITATION TECHNOLOGIES, INC.
4
CAVITATION TECHNOLOGIES, INC.
See accompanying notes, which are an integral part of these financial statements
5
CAVITATION TECHNOLOGIES, INC.
See accompanying notes, which are an integral part of these financial statements
6
CAVITATION TECHNOLOGIES, INC.
See accompanying notes, which are an integral part of these financial statements
7
CAVITATION TECHNOLOGIES, INC.
Note 1 - Nature of Operations
Hydrodynamic Technology, Inc. was incorporated January 29, 2007 as a California corporation. It is a wholly
owned subsidiary of Cavitation Technologies, Inc., a Nevada corporation originally incorporated under the name Bio Energy, Inc.
Cavitation Technologies, Inc. has developed, patented, and commercialized proprietary technology for processing soybean oil through
a device called the Nano Neutralization™ Reactor (the "Reactor"). The Reactor is the critical component of
the
Nano Neutralization System
which is designed to reduce operating costs and increase yields in the refining of vegetable oils. The
Company designs and engineers environmentally friendly NANO technology based systems that have potential commercial
applications in industries such as vegetable oil refining, renewable fuels, water-oil emulsions, alcoholic beverage enhancement, algae
oil extraction, and crude oil yield enhancement.
Basis for Presentation
We have prepared the accompanying consolidated unaudited financial statements of the Company in
accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial statements and
with instructions to Form 10-Q pursuant to the rules and regulations of Securities and Exchange Act of 1934, as amended (the
"Exchange Act") and Article 8-03 of Regulation S-X under the Exchange Act. Accordingly, these financial statements do not include all
of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, we have included
all adjustments considered necessary (consisting of normal recurring adjustments) for a fair presentation. Operating results for the six
months ended December 31, 2011 are not indicative of the results that may be expected for the fiscal year ending June 30, 2012. You
should read these unaudited consolidated financial statements in conjunction with the audited financial statements and the notes
thereto included in the Company's annual report on Form 10-K for the year ended June 30, 2011.
Note 2 - Management's Plan Regarding Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting
principles which contemplate continuation of the Company as a going concern. The Company has no significant operating history and,
from January 29, 2007, (inception), through December 31, 2011, generated a net loss of $17,471,596. To date, we recorded cumulative
revenue of $704,080. Cumulative negative cash flow from operations of about $3.6 million was funded largely with $3.3 million in equity
and $0.7 million in loans and advances. Total Stockholder's Deficit at December 31, 2011 was $1,266,495. These factors, among
others, raise doubt about the Company's ability to continue as a going concern.
Management's plan is to generate income from operations by licensing our technology globally through our
strategic partner, the Desmet Ballestra Group. We will also attempt to raise additional debt and/or equity financing to fund operations
and to provide additional working capital. However, there is no assurance that such financing will be consummated or obtained in
sufficient amounts necessary to meet the Company's needs, or that the Company will be able to meet its future contractual obligations.
Should management fail to obtain such financing, the Company may curtail its operations. The accompanying consolidated financial
statements do not include adjustments to reflect the possible future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from an inability of the Company to continue as a going concern.
As a result of the aforementioned factors, our independent auditors, in their report on our audited financial
statements for the fiscal year ended June 30, 2011, expressed substantial doubt our ability to continue as a going concern.
8
The accompanying consolidated financial statements do not include adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from an inability of
the Company to continue as a going concern.
Note 3 - Summary of Significant Accounting Policies
Patents
Capitalized patent costs represent legal fees associated with procuring and filing patent applications. The
Company accounts for patents in accordance with Accounting Standards Codification ("ASC") 350-30,
General
Intangibles Other Than Goodwill
. As of December 31, 2011, the Company recorded $111,694 in net patents comprised of
$115,190 in gross patents and $3,495 in cumulative amortization which are capitalized in the accompanying consolidated balance
sheet. This compares with a net of $118,153 at June 30, 2011 comprised of $121,112 in gross capitalized patents and accumulated
amortization of $2,963. On October 25, 2011, the Company had a patent granted for its
Multi-Stage Cavitation Device
which will
be amortized over an estimated useful life of 4 years. The Company has been issued two patents and has eight US and eight
PCT/international applications pending.
At December 31, 2011, future amortization of patent costs is estimated as follows:
Related Party Advances
The Company advanced Igor Gorodnitsky, President, and Roman Gordon, Chief Technology Officer, $15,000
each for operating expenditures that will be incurred on behalf of the Company during fiscal 2012. This amount was reduced to $25,560
on December 31, 2011.
Deferred Revenue
The Company received a license fee of $100,000 from the Desmet Ballestra Group ("Desmet")
during the six months ended December 31, 2011 for CTi
Nano Reactors
that are expected to be delivered to Desmet during
fiscal 2012. The Company received a deposit of $7500 during the 4
th
quarter of fiscal 2010 and $9,451 during the
1
st
quarter of fiscal 2011 relating to the fabrication of the Company's
NANO Neutralization System
. We expect
the customer to complete trials in the 3
rd
or 4
th
quarter of fiscal 2012 at which time we expect to
recognize this amount as revenue.
Fair Value Measurement
ASC 820-10 requires entities to disclose the fair value of financial instruments, both assets and liabilities
recognized and not recognized on the balance sheet for which it is practicable to estimate fair value. ASC 820-10 defines the fair value
of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As
of December 31, 2011, the carrying value of certain accounts such as inventory, accounts payable, accrued expenses, accrued payroll
and short-term loans approximates fair value due to the short-term nature of such instruments.
9
The following table presents information about the Company's assets and liabilities measured and reported in
the financial statements at fair value on a recurring basis as of December 31, 2011 and indicates the fair value hierarchy of the
valuation techniques utilized to determine such fair value. The three levels of the fair value hierarchy are as follows:
Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that
the entity has the ability to access.
Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not
active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or
liabilities.
Level 3 - Valuations based on inputs that are unobservable, supported by little or no market activity and
that are significant to the fair value of the assets or liabilities.
The derivative liability attributed to the convertible notes' conversion feature is measured using the Black-Sholes option valuation
model. Refer to Note 8, "Convertible Notes Payable" for the inputs to the Black-Sholes option valuation model.
The following tables provide a reconciliation of the beginning and ending balances of our financial liabilities classified as Level 3:
Advertising and Promotion Costs
Advertising costs (including marketing expenses) incurred in the normal course of operations are expensed as
incurred. Expenses amounted to $26,964, $12,281, and $249,288 for the six months ended December 31, 2011 and 2010, and the
period from January 29, 2007 (date of inception) through December 31, 2011, respectively. Advertising expenses amounted to $12,850
and $8,178 for the three months ended December 31, 2011 and 2010, respectively.
10
Note 4 - Net Loss per Share - Basic and Diluted
The Company computes the loss per common share using ASC 260,
Earnings Per
Share
. The net loss per common share, both basic and diluted, is computed based on the weighted average
number of shares outstanding for the period. The diluted loss per common share is computed by dividing the net loss
attributable to common stockholders by the weighted average shares outstanding assuming all potential dilutive common shares were
issued.
On December 31, 2011, the Company had 1,810,957 stock options and 13,145,618 warrants outstanding to
purchase common stock that were not included in the diluted net loss per common share because their effect would be anti-dilutive.
In addition, the Company had 111,111 shares of Series A Preferred Stock outstanding which are convertible
into approximately 333,333 shares of common stock. The Company also had $132,500 of outstanding convertible notes payable,
before any discounts, which are convertible into 6,814,904 shares of common stock as of December 31, 2011. These items were also
not included in the calculation of diluted net loss per common share because their effect would be anti-dilutive.
Note 5 - Property and Equipment
Property and equipment consisted of the following as of December 31, 2011 (unaudited) and June 30, 2011.
Depreciation expense amounted to $23,141, $9,082, and $70,891 for the six months ended December 31, 2011
and 2010 and the period from January 29, 2007 (date of inception) through December 31, 2011, respectively.
Note 6 - Bank Loan
On November 1, 2010, we renewed our loan with National Bank of California until November 1, 2011 with 11
monthly payments of $6,000 and a final payment of $474,171. The interest rate floor was increased from 7.0% to 7.5%. On November
1, 2011, the maturity of the variable rate loan was extended to February 1, 2013. Monthly payments include 14 principal payments of
$6,000 along with accrued and unpaid interest. In addition, CTi is to make a quarterly principal payment of $50,000. The remaining
principal and accrued interest of approximately $110,000 is due February 1, 2013. As of December 31, 2011, the outstanding balance
on the loan was $382,271.
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Note 7 - Short-Term Loans and Advances
On October 26, 2010, the Company entered into a loan agreement with Desmet Ballestra North America, Inc. under which the
Company borrowed $75,000. This agreement was restructured on January 21, 2011 extending the due date on the initial payment to
March 31, 2011. The outstanding balance on December 31, 2011 was $60,000. The loan bears no interest but accrued interest on late
payments amounted to $2,750 at December 31, 2011. Principal payments are being made to Desmet when possible.
On December 28, 2011, the CEO, Todd Zelek, extended to the company a $100,000 short term loan due on
demand at an annual interest rate of 12%. This loan is expected to be converted into a convertible promissory note or some other form
of financing in the 3
rd
quarter of fiscal 2012.
Note 8 - Convertible Notes Payable
On February 1, 2011, the Company issued convertible promissory notes to the Tripod Group, LLC, (the
"Tripod Notes") for an aggregate total amount of $61,212. From February through October 2011, Tripod converted the entire
$61,212 into 1,635,897 shares of common stock.
On February 8, 2011, the Company issued a convertible promissory note payable to Asher Enterprises, Inc.,
(the "Asher Note"), in the amount of $42,500. During the quarter ended September 30, 2011, the entire $42,500 was
converted into 1,359,457 shares of common stock at a value of $91,258, and the $47,059 beneficial conversion feature was reclassified
to additional paid in capital.
On June 6, 2011, the Company issued a convertible promissory note payable to Asher Enterprises, Inc., (the
"Second Asher Note") in the amount of $47,500. During the second quarter of fiscal 2012, the $47,500 outstanding balance
was paid incurring a pre-payment penalty (interest expense) of $23,750. The company pre-paid the convertible promissory note as part
of our overall strategy to minimize the issuance of shares.
On June 24, 2011, we issued a convertible promissory note payable to GEL Properties, LLC, (the "GEL
Note") in the amount of $52,500. The Note is due June 24, 2012 and bears interest at a rate of six percent per annum. The Note
is convertible into shares of our common stock at a conversion price equal to 65% of the average day's lowest closing bid out of the 5
trading days prior to conversion. The transaction was funded July 12, 2011. The issuance of the GEL Note amounted in a beneficial
conversion feature of $28,269 on the issue date, which has been recorded as a discount to the carrying value of the note. As of
December 31, 2011, the remaining discount balance amounted to $13,594. By virtue of the variable conversion ratio, the conversion
feature is a derivative under ASC 815-40, Derivatives and Hedging, and is measured using the Black-Sholes option valuation model.
Accordingly, the value of the conversion feature has been classified as a derivative liability on the accompanying balance sheet. Refer
to the table below for the inputs used in the Black-Scholes option valuation model. As of December 31, 2011, none of the outstanding
balance had been converted into common shares.
12
On December 6, 2011 we issued a convertible promissory note payable to the Prolific Group, LLC, (the
"Prolific Note") in the amount of $25,000. The Note is due December 6, 2012 and bears interest at 6% p.a. The Note is
convertible into shares of our common stock at a conversion price equal to 65% of the average day's lowest closing bid out of the 5
trading days prior to conversion. The issuance of the Prolific Note amounted in a beneficial conversion feature of $4,673 on the issue
date which has been recorded as a discount to the carrying value of the note. As of December 31, 2011, the remaining discount
balance amounted to $4,354. By virtue of the variable conversion ratio, the conversion feature is a derivative under ASC 815-40,
Derivatives and Hedging, and is measured using the Black-Sholes option valuation model. Accordingly, the value of the conversion
feature has been classified as a derivative liability on the accompanying balance sheet. Refer to the table below for the inputs used in
the Black-Scholes option valuation model. As of December 31, 2011, the outstanding balance remained $25,000.
On December 6, 2011 we issued a convertible promissory note payable to the Tripod Group, LLC, (the
"Tripod Note") in the amount of $30,000. The Note is due December 6, 2012 and bears interest at 6% p.a. The Note is
convertible into shares of our common stock at a conversion price equal to 65% of the average day's lowest closing bid out of the 5
trading days prior to conversion. The issuance of the Tripod Note amounted in a beneficial conversion feature of $5,608 on the issue
date which has been recorded as a discount to the carrying value of the note. As of December 31, 2011, the remaining discount
balance amounted to $5,225. By virtue of the variable conversion ratio, the conversion feature is a derivative under ASC 815-40,
Derivatives and Hedging, and is measured using the Black-Sholes option valuation model. Accordingly, the value of the conversion
feature has been classified as a derivative liability on the accompanying balance sheet. Refer to the table below for the inputs used in
the Black-Scholes option valuation model. As of December 31, 2011, the outstanding balance remained $30,000.
On December 21, 2011 we issued a convertible promissory note payable to Asher Enterprises, Inc., (the
"Asher Note") in the amount of $25,000. The Note is due September 21, 2012 and bears interest at 8% p.a. The Note is
convertible into shares of our common stock at a conversion price equal to 60% of the average day's lowest trading price during the 10
trading days prior to conversion. The issuance of the Asher Note amounted in a beneficial conversion feature of $7,146 on the issue
date which has been recorded as a discount to the carrying value of the note. As of December 31, 2011, the remaining discount
balance amounted to $6,886. By virtue of the variable conversion ratio, the conversion feature is a derivative under ASC 815-40,
Derivatives and Hedging, and is measured using the Black-Sholes option valuation model. Accordingly, the value of the conversion
feature has been classified as a derivative liability on the accompanying balance sheet. Refer to the table below for the inputs used in
the Black-Scholes option valuation model. As of December 31, 2011, the outstanding balance remained $30,000.
On December 31, 2011, the outstanding balance of Convertible Notes Payable (net of discounts) as recorded
on the balance sheet amounted $102,442, consisting of outstanding principal of $132,500 less discount of $30,058. By virtue of the
variable conversion ratios of these transactions, the conversion feature of the above notes is a derivative under ASC 815-40,
Derivatives and Hedging
. Accordingly, the value of the conversion feature has been classified as a derivative liability on the
accompanying balance sheet. As of December 31, 2011, the aggregate value of the conversion features associated with the above
notes amounted to $77,808. The beneficial conversion feature is measured using the Black-Scholes option valuation model. The inputs
used for the Black-Scholes option valuation model were:
Note 9 - Stockholders' Equity
Preferred Stock
The Company has 5,000,000 shares of Series A Preferred Stock authorized and 111,111 shares outstanding.
Series A Preferred Stock is convertible into common stock at a rate of 3 shares of common stock per share of each Series A Preferred
Stock held at any time at the option of the preferred shareholders. In the event of a liquidation, dissolution or winding up of the
Company, the holders of Series A Preferred will have liquidation preferences prior to distributions made to any other class of
stockholder. The Series A Preferred Stock is not redeemable. On the third anniversary date of the issuance of the preferred shares, any
Series A Preferred shares outstanding are automatically converted into common stock, at a conversion rate of 3 shares for common to
1 share of Series A Preferred Stock.
13
The holders of the Series A Preferred Stock are entitled to receive out of any funds legally available dividends at
the rate of 6% per annum payable on September 30 and March 30. Dividends shall accrue and be cumulative whether or not they have
been declared. Dividends may be paid in cash or through the issuance of additional shares of Series A Preferred Stock at the
Company's option. As of December 31, 2011, cumulative dividends amounted to $16,733. As of December 31, 2011, none of the
cumulative dividends have been paid and are recorded in accrued expenses on the accompanying consolidated balance sheet.
The Company has authorized 5,000,000 shares of Preferred Stock as Series B Preferred Stock. The Board of
Directors can establish the rights, preferences and privileges of the Series B Preferred Stock. There are no shares of Series B
Preferred Stock outstanding.
Stock Options
A summary of the stock option activity for the six months ended December 31, 2011 is presented below.
The following table summarizes information about outstanding stock options as of December 31, 2011.
14
A summary of the warrant activity for the six months ended December 31, 2011 is presented below.
The following table summarizes information about outstanding warrants as of December 31, 2011.
Note 10 - Income Taxes
The Company accounts for income taxes in accordance with ASC 740,
Income Taxes
. Under ASC 270,
Interim Financial Reporting
, the Company is required to adjust its effective tax rate each quarter to be consistent with the
estimated annual effective tax rate. The Company is also required to record the tax impact of certain discrete items, unusual or
infrequently occurring, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the
interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax benefit
can be recognized are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or
lower effective tax rate during a particular quarter based upon the mix and timing of actual earnings versus annual projections. The
Company has estimated its annual effective tax rate to be zero. This is based on an expectation that the Company will generate net
operating losses in the year ending June 30, 2012, and it is not more likely than not that those losses will be recovered using future
taxable income. Therefore, no provision for income tax or tax liability has been recorded as of and for the period
ended December 31, 2011.
15
ASC 740-10,
Accounting for Uncertainty in Income Taxes,
indicates criteria that an individual tax position
must satisfy for some or all of the benefits of that position to be recognized in the financial statements. ASC 740-10 includes a higher
standard that tax benefits must meet before they can be recognized in a company's financial statements. As the Company has no
uncertain tax positions as defined in ASC 740, there are no corresponding unrecognized tax benefits. Any future changes in the
unrecognized tax benefit will have no impact on the Company's effective tax rate due to the existence of the valuation allowance. The
Company estimates that the unrecognized tax benefit will not change significantly within the next twelve months. It is the Company's
policy to classify income tax penalties and interest, if any, as part of general and administrative expense in its Statements of
Operations. The Company has not incurred any interest or penalties since inception.
Note 11 - Commitments and Contingencies
Lease Agreements
Total rent expense was $30,643, $25,500 and $277,814 for the six months ended December 31, 2011 and
2010, and for the period from January 29, 2007 (date of inception) through December 31, 2011, respectively. The Company's lease
agreement extends through February 1, 2012 with a one-year option to extend the lease to February 1, 2013. Monthly payments of
$4,378 will increase to approximately $4,509 beginning in February 2012. The Company has a security deposit of $9,500 associated
with this lease.
Royalty Agreements
On July 1, 2008, our wholly owned subsidiary entered into Patent Assignment Agreements with our President
and former CEO, (current CTO), where certain devices and methods involved in the hydrodynamic cavitation processes invented by
the President and CTO have been assigned to the Company. In exchange, the Company agreed to pay a royalty of 5% of gross
revenues to each of the CTO and President for licensing of the technology and leasing of the related equipment embodying the
technology. These agreements were subsequently assigned to Cavitation Technologies on May 13, 2010. The Company's CTO and
President both waived their rights to receive royalty payments that have accrued, or that may accrue, on any gross revenue generated
through December 31, 2011. Therefore, no royalties have accrued or been paid.
On April 30, 2008 (as amended November 22, 2010), our wholly owned subsidiary entered into an employment
agreement with Varvara Grichko who became a member of the Board of Directors in September 2010. Mrs. Grichko shall receive an
amount equal to 5% of actual gross royalties received from the royalty stream in the first year in which the Company receives royalty
payments from the patent which Mrs. Grichko was the legally named inventor and 3% of actual gross royalties received by the
Company from the patent in each subsequent year. As of December 31, 2011, no patents have been granted in which Mrs. Grichko is
the legally named inventor.
Licensing Agreement
On November 15, 2010 we signed a
Technology License, Marketing &Collaboration Agreement
with N.V. Desmet Ballestra Group S.A. ("Desmet"). The agreement gives Desmet the exclusive worldwide license
to market the CTI Nano Reactor System ("CTI System") in the field of vegetable oil processing (the "Licensed
Field"). Under this Agreement, Desmet is responsible for marketing the CTI System to end users in the Licensed Field, as well as
the construction, installation and maintenance of the system. In consideration for services rendered, CTi agrees to pay
Desmet a fee generated from revenue derived from licensing our systems and technology. This agreement supersedes a
previous agreement between the parties signed January 15, 2010. Desmet is committed to installing a minimum number of systems by
June 30, 2012 in order to maintain their exclusivity.
16
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our financial statements and the related notes. This
discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as its plans,
objectives, expectations and intentions. Its actual results and the timing of certain events could differ materially from those anticipated in
these forward-looking statements.
Overview
Hydrodynamic Technology, Inc. was incorporated January 29, 2007 as a California corporation. It is a wholly
owned subsidiary of Cavitation Technologies, Inc. (referred to herein, unless otherwise indicated, as "the Company,"
"CTi," "we," "us," and "our") a Nevada corporation originally incorporated under the name
Bio Energy, Inc. Cavitation Technologies, Inc. has developed, patented, and commercialized proprietary technology for processing
soybean oil through a device called the Nano Neutralization™ Reactor (the "Reactor"). The Reactor is the critical
component of the Nano Neutralization System which is designed to reduce operating costs and increase yields in the refining of
vegetable oils.
The company is focused on merchandising our
NANO Neutralization System
- a vegetable oil refining
system that employs our proprietary continuous flow-through, hydrodynamic
NANO
Technology
in the form of our multi-
stage NANO Series of reactors. The principle market for our systems includes global soybean oil refiners who process oils in order to
produce products that are used for human consumption and other uses. We recognized revenue of $589,926 n fiscal 2011 and
$114,154 for the first six months of fiscal 2012. To date, we have licensed two systems.
Management's Plan
We are a development stage entity engaged in merchandising our
NANO Neutralization System
which is
designed to help refine vegetable oils such as soybean, canola, and rapeseed. Our near term goal is to successfully merchandise our
systems. We have no significant operating history and, from January 29, 2007, (inception), through December 31, 2011 generated a net
loss of $17,471,596. We also have negative cash flow from operations and negative net equity. The accompanying financial
statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the
Company as a going concern.
Management's plan is to generate income from operations by licensing our technology globally through our
strategic partner, the Desmet Ballestra Group. We will also attempt to raise additional debt and/or equity financing to fund future
operations and to provide additional working capital. However, there is no assurance that such financing will be consummated or
obtained in sufficient amounts necessary to meet the Company's needs, or that the Company will be able to meet its future contractual
obligations. Should management fail to obtain such financing, the Company may curtail its operations.
Critical Accounting Policies
CTi's critical accounting policies and estimates are included in its Annual Report on Form 10-K for the year ended June 30, 2011,
and did not change for the six months ended December 31, 2011.
17
Results of Operations for the Three Months Ended December 31, 2011 Compared to the Three Months Ended December 31, 2010
The following is a comparison of our results of operations for the three months ended December 31, 2011 and 2010.
Revenue
During the three months ended December 31, 2011, our revenue consisted primarily of
NANO Neutralization
System
reactor sales of $100,000 to clients in Argentina and Romania. This compares with $248K recorded during the same period in fiscal 2011
associated primarily with the sale of a
NANO Neutralization System
to a customer located in North Carolina. In addition, during
the quarter ended December 31, 2011, we recognized revenue of $14,154 associated with services provided.
Cost of Revenue
During the three months ended December 31, 2011, our cost of sales amounted to $23,014 which was the
result of the revenue transactions described above. One of the units sold in 2010 was a prototype, and as a result much of the
associated cost was expensed in a prior year.
Operating Expenses
Operating expenses for the three months ended December 31, 2011 amounted to $453,591 compared with
$1,020,133 for the three months ended December 31, 2010, a decrease of $566,542, or 55.5%. The decrease was attributable to a
$495,866 reduction in G&A and a $70,676 drop in R&D expenses.
G&A decreased by $495,866 for the three months ended December 31, 2011 compared to 2010 largely
because of a reduction in consulting fees of $130,000 and the elimination of a one-time bonus payment of $392,000 in restricted
shares that occurred in the second quarter of fiscal 2010 but did not occur in 2011. The primary cash expenditures during the second
quarter of fiscal 2011 amounted to $122,719 and consisted largely of professional service fees such as auditors, attorneys, and SEC
related services which remained fairly consistent between the periods.
Our R&D expenses decreased by $70,676 because of decreased emphasis on R&D and increased
emphasis on merchandising our reactors/systems as well as cash conservation measures.
18
Interest Expense
Interest expense for the 3 months ended December 31, 2011 amounted to $77,197, an increase of $67,653. The increase was
attributable largely to non-cash charges such as $44,152 in amortization of discount on convertible notes payable. Cash payments
included $23,750 as a prepayment premium for repayment of a $47,500 convertible promissory note to Asher Enterprises. There were
no such expenses during the three months ended December 31, 2010. Cash interest expense payments on the bank loan were $6,047
versus $9,073 during the 2
nd
quarter of fiscal 2010 as the outstanding principal declined from $498,760 on December
31, 2010 to $382,271 on December 31, 2011.
Results of Operations for the Six Months Ended December 31, 2011 Compared to the Six Months Ended December 31, 2010
The following is a comparison of our results of operations for the six months ended December 31, 2011 and 2010.
Revenue
During the six months ended December 31, 2011, our revenue consisted primarily of
NANO Neutralization
System
reactor sales of $100,000 to clients in Argentina and Romania. This compares with $248K recorded during the same period in fiscal 2011
associated primarily with the sale of a
NANO Neutralization System
to a customer located in North Carolina. In addition, during
the six months ended December 31, 2011, we recognized revenue of $14,154 associated with services provided.
Cost of Revenue
During the six months ended December 31, 2011, our cost of sales amounted to $23,014 which arose from the
revenue transactions described above. One of the units sold in 2010 was a prototype, and as a result much of the associated cost was
expensed in a prior year.
Operating Expenses
Operating expenses for the six months ended December 31, 2011 amounted to $763,272 compared to
$2,170,517 in 2010, a decrease of $1,407,245, or 64.8%. The decrease was attributable to a $1,119,791 reduction in G&A and a
$283,865 drop in R&D expenses.
19
G&A decreased by $1,123,280 for the six months ended December 31, 2011 compared to 2010 largely
because of a reduction in consulting fees of $302,581 and the elimination of a one-time bonus payment of $789,075 in restricted
shares to key employees for services provided. The primary cash expenditures during the first half of fiscal 2012 were $201,117 for
professional service fees such as auditors, attorneys, and SEC related services and $299,961 in mostly accrued salaries and salary related expenses.
These expenses for the first half of fiscal 2011 were $266,382 and $232,257 respectively.
Our R&D expenses decreased by $283,865 because of decreased emphasis on R&D and increased
emphasis on merchandising our reactors/systems as well as cash conservation measures.
Interest Expense
Interest expense increased by $103,975, or 467.6%, for the six months ended December 31, 2011 as compared to 2010. This
increase was attributable largely to non-cash charges including $83,395 in amortization of discount on convertible notes payable. There
were no such expenses during the six months ended December 31, 2010.
The major uses of cash in the first half of fiscal 2012 included $15,306 in interest expense to National Bank of California related to a
loan and interest expense of $23,750 in the form of a pre-payment premium for repayment of a $47,500 convertible
promissory note to Asher Enterprises. During the first half of fiscal 2011, interest expense on the bank loan amounted to $16,248 as the
outstanding principal declined from $498,760 on December 31, 2010 to $382,271 on December 31, 2011.
Liquidity and Capital Resources
CTi's primary sources of liquidity have been issuances of restricted common stock to service providers, sale of
common stock for cash, issuances of convertible promissory notes, and short-term loans and advances from a strategic partner.
In our
Notes to Financial Statements
, see Note 6 "Bank Loan", Note 7 "Short-Term
Loans and Advances, Note 8 "Convertible Notes Payable," and Note 9, "Stockholder's Equity" for more
information. CTi's ability to continue to issue restricted common stock in exchange for services may be adversely affected by the
performance of our stock price. Additionally, CTi's ability to issue long-term debt and obtain short-term loans may be negatively
impacted by domestic economic conditions that create a tight credit environment, particularly for development stage companies. It is
our intention to rely less on the issuance of stock as payment to service providers, and more on cash generated from operations by
licensing our technology globally through our strategic partner, Desmet Ballestra.
Common Stock
During the six months ended December 31, 2011, we issued 600,000 shares of common stock for $35,000
compared with 3,004,211 shares of common stock for $324,641 in cash for the six months ended December 31, 2010.
Share-based Compensation
During the six months ended December 31, 2011 we issued 1,660,711 shares of restricted common stock
valued at $81,713 as payment to service providers. During the six months ended December 31, 2010, we issued 4,568,827 shares of
common stock valued at $717,712 as payments to service providers.
Cash Flow
Net cash used in operating activities during the six months ended December 31, 2011 declined to $176,788
from $343,863 for the same period in fiscal 2011. Net cash of $176,788 was used largely to pay auditors ($43K), interest expense of
$39,056, and a consultant's fee of $35K. During the six months ended December 31, 2010, the net cash used in operating activities of
$343,863 was used largely to pay salary and related expenses, R&D, interest expense and professional fees such as attorneys
and accountants.
20
The major non-financial uses of cash for the first half of fiscal 2012 were $104K in repayment of principal on the bank loan and
$47,500 in repayment of a convertible note payable. Cumulative uses of cash of about $350,000 for the first 6 months of fiscal 2012
were funded by a $100,000 advance relating to a license for a client in Europe, $132,500 in funding from convertible notes payable,
$100,000 in a short term loan from our CEO, and $35,000 in the sale of common stock. Net cash provided by financing activities during
the six months ended December 31, 2010 amounted to $476,676 arising from the sale of common stock of $324,641 and proceeds
from short-term loans of $187,025, offset by the payment of short-term loans of $9,000 and payments for the bank loan of $25,990.
Commitments
Lease Agreements
On December 30, 2009, we extended our existing lease agreement for approximately 5,000 square feet of office
and warehouse space at 10019 Canoga Ave for a period of two years effective February 1, 2010. Monthly rent under
the extended lease agreement is $4,375 per month. On February 1, 2012, we invoked a one-year option to make monthly payments of
about $4,509/month for each of the next 12 months.
Royalty Agreements
On July 1, 2008, our wholly owned subsidiary entered into Patent Assignment Agreements with our President
and former CEO, (current CTO), where certain devices and methods involved in the hydrodynamic cavitation processes invented by
the President and CTO have been assigned to the Company. In exchange, the Company agreed to pay a royalty of 5% of gross
revenues to each of the CTO and President for licensing of the technology and leasing of the related equipment embodying the
technology. These agreements were subsequently assigned to Cavitation Technologies on May 13, 2010. The Company's CTO and
President both waived their rights to receive royalty payments that have accrued, or that may accrue, on any gross revenue generated
from May 13, 2010 through December 31, 2011. Therefore, no royalties have accrued or been paid.
On April 30, 2008 (as amended November 22, 2010), our wholly owned subsidiary entered into an employment
agreement with Varvara Grichko who became a member of the Board of Directors in September 2010. Mrs. Grichko shall receive an
amount equal to 5% of actual gross royalties received from the royalty stream in the first year in which the Company receives royalty
payments from the patent which Mrs. Grichko was the legally named inventor, and 3% of actual gross royalties received by the
Company from the patent in each subsequent year. As of December 31, 2011, no patents have been granted in which Mrs. Grichko is
the legally named inventor.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable for smaller reporting companies.
ITEM 4. Controls and Disclosures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have evaluated the Company's disclosure controls and procedures as
defined in Rules 13a-15(b)(e) and 15d-15(b)(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this
report, and they have concluded that these controls and procedures are effective.
Changes in Internal Control over Financial Reporting
In accordance with the requirements of Rule 13a-15(d) of the Securities Exchange Act of 1934, there were no changes in
internal control over financial reporting during the second quarter of fiscal 2012 that have materially affected or are reasonably likely to
materially affect the company's internal control over financial reporting.
21
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
We know of no material, existing or pending legal proceeding against our Company, nor are we involved as a plaintiff in any
material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates,
or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
The following is a listing of unregistered security activity during the six months ended December 31, 2011.
Issuance of Common Stock
On August 22, 2011, the Company issued 300,000 shares of common stock to for a total consideration of
$15,000 to Charles Collier, a non-affiliated accredited investor. The shares were issued in reliance on Section 4(2) of the Securities Act
of 1933, as amended. The shares were not offered via general solicitation to the public but solely to Charles Collier. The Company
issued restricted shares in connection with this issuance. No sales commissions or other remuneration was paid in connection with
these issuances.
On August 22, 2011, the Company issued 300,000 shares of common stock to for a total consideration of
$20,000 to Catherine Shaw, a non-affiliated accredited investor. The shares were issued in reliance on Section 4(2) of the Securities
Act of 1933, as amended. The shares were not offered via general solicitation to the public but solely to Charles Collier. The Company
issued restricted shares in connection with this issuance. No sales commissions or other remuneration was paid in connection with
these issuances.
Issuance of Restricted Common Stock for Services
On July 13, 2011, we issued 110,342 shares of common stock with a recorded value of $7,662 to Michael
Psomas for accounting services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The
shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The Company issued
restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with these
issuances.
On July 13, 2011, we issued 13,075 shares of common stock with a recorded value of $908 to Silvio Nardoni for
legal services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The shares were not
offered via general solicitation to the public but solely to the aforementioned service provider. The Company issued restricted shares in
connection with these issuances. No sales commissions or other remuneration was paid in connection with these issuances.
On July 13, 2011, we issued 156,477 shares of common stock with a recorded value of $10,865 to New Venture
Attorneys for legal/SEC services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The
shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The Company issued
restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with these
issuances.
On July 13, 2011, we issued 35,000 shares of common stock with a recorded value of $2,430 to Varvara
Grichko for services as a member of the board of directors. The shares were issued in reliance on Section 4(2) of the Securities Act of
1933, as amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service provider.
The Company issued restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in
connection with these issuances.
22
On July 13, 2011, we issued 55,555 shares of common stock with a recorded value of $3,857 to Sonia Luna for
SOX consulting services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The shares
were not offered via general solicitation to the public but solely to the aforementioned service provider. The Company issued restricted
shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with these
issuances.
On July 13, 2011, we issued 9,000 shares of common stock with a recorded value of $625 to Shannon Stokes
for office management services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The
shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The Company issued
restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with these
issuances.
On August 19, 2011, we issued 64,594 shares of common stock with a recorded value of $3,488 to Michael
Psomas for accounting services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The
shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The Company issued
restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with these
issuances.
On August 19, 2011, we issued 46,785 shares of common stock with a recorded value of $2,527 to New
Venture Attorneys PC for SEC/legal services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as
amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The
Company issued restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in
connection with these issuances.
On August 19, 2011, we issued 50,000 shares of common stock with a recorded value of $2,700 to Kirk Wiggins
for marketing and sales services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The
shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The Company issued
restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with these
issuances.
On August 19, 2011, we issued 37,500 shares of common stock with a recorded value of $2,025 to James
Fuller for services as a member of the board of directors. The shares were issued in reliance on Section 4(2) of the Securities Act of
1933, as amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service provider.
The Company issued restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in
connection with these issuances.
On August 22, 2011, we issued 230,000 shares of common stock with a recorded value of $12,421 to Pinnacle
Financial Group for investor relations and marketing services. The shares were issued in reliance on Section 4(2) of the Securities Act
of 1933, as amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service
provider. The Company issued restricted shares in connection with these issuances. No sales commissions or other remuneration was
paid in connection with these issuances.
On September 29, 2011, we issued 356,924 shares of common stock with a recorded value of $13,768 to Mike
Psomas for accounting services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. The
shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The Company issued
restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with these
issuances.
On September 29, 2011, we issued 10,000 shares of common stock with a recorded value of $386 to Varvara
Grichko for services as member of the board of directors. The shares were issued in reliance on Section 4(2) of the Securities Act of
1933, as amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service provider.
The Company issued restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in
connection with these issuances.
23
On October 25, 2011, we issued 35,000 shares of common stock with a recorded value of $1,315 to Varvara
Grichko for services as a member of the board of directors. The shares were issued in reliance on Section 4(2) of the Securities Act of
1933, as amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service provider.
The Company issued restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in
connection with these issuances.
On October 25, 2011, we issued 9,000 shares of common stock with a recorded value of $338 to Shannon
Stokes for office management services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended.
The shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The Company
issued restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in connection with
these issuances.
On November 1, 2011, we issued 353,959 shares of common stock with a recorded value of $13,300 to Michael
Psomas/Audit Prep Services for accounting services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933,
as amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The
Company issued restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in
connection with these issuances.
On November 22, 2011, we issued 50,000 shares of common stock with a recorded value of $1,493 to Kirk
Wiggins for marketing and sales services. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as
amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service provider. The
Company issued restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in
connection with these issuances.
On November 22, 2011, we issued 37,500 shares of common stock with a recorded value of $1,119 to James
Fuller for services as a member of the board of directors. The shares were issued in reliance on Section 4(2) of the Securities Act of
1933, as amended. The shares were not offered via general solicitation to the public but solely to the aforementioned service provider.
The Company issued restricted shares in connection with these issuances. No sales commissions or other remuneration was paid in
connection with these issuances.
With the exception of Varvara Grichko and Jim Fuller who are affiliates of the company, none of the
aforementioned service providers are affiliates of the Company.
Issuance of Common Stock for Conversion of Indebtedness
On August 16, 2011, we issued 287,356 shares of common stock to Asher Enterprises, Inc. as conversion of
$10,000 in outstanding convertible notes payable. On August 17, 2011, we issued 391,850 shares of common stock to Asher as
conversion of $12,500 in outstanding convertible notes payable. On August 19, 2011, we issued 391,850 shares of common stock to
Asher as conversion of $12,500 in outstanding convertible notes. On August 22, 2011, we issued 288,401 shares of common stock to
Asher as conversion of $7,500 in outstanding convertible notes payable and $1,700 in accrued interest. These shares were issued in
reliance on Section 4(2) of the Securities Act of 1933, as amended. These shares were not offered via general solicitation to the public
but solely to Asher Enterprises, Inc. The Company issued restricted shares in connection with these issuances. No sales commissions
or other remuneration was paid in connection with these issuances.
On September 13, 2011, we issued 30,769 shares of common stock to Tripod Group, LLC as conversion of
$1,000 of outstanding convertible notes payable. On September 15, 2011, we issued an additional 46,154 shares of common stock to
Tripod Group, LLC as conversion of $1,500 of outstanding convertible notes. On September 16, 2011, we issued 76,923 shares of
common stock to Tripod Group, LLC as conversion of $2,500 of outstanding convertible notes payable. These shares were issued in
reliance on Section 4(2) of the Securities Act of 1933, as amended. These shares were not offered via general solicitation to the public
but solely to the aforementioned service provider. The Company issued restricted shares in connection with these issuances. No sales
commissions or other remuneration was paid in connection with these issuances.
24
On October 4, 2011 we issued 130,393 shares of common stock to Tripod Group, LLC as conversion of $3,475
of outstanding convertible notes payable. On October 5, 2011, we issued an additional 178,891 shares of common stock to Tripod
Group, LLC as conversion of $5,000 of outstanding convertible notes. On October 6, 2011, we issued 429,338 shares of common stock
to Tripod Group, LLC as conversion of $12,000 of outstanding convertible notes payable. On October 10, 2011, we issued 35,778
shares of common stock to Tripod Group, LLC as conversion of $1,000 of outstanding convertible notes payable. On October 11, 2011,
we issued 194,231 shares of common stock to Tripod Group, LLC as conversion of $5,367 of outstanding convertible notes payable.
These shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended. These shares were not offered via
general solicitation to the public but solely to the aforementioned service provider. The Company issued restricted shares in connection
with these issuances. No sales commissions or other remuneration was paid in connection with these issuances.
Item 3 - Defaults Upon Senior Securities
None
Item 4 - (Reserved and Removed)
Item 5 - Other Information
None
25
Item 6 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report or incorporated by reference.
26
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED
BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES
INDICATED.
SIGNATURE
TITLE
DATE
/s/ Todd Zelek
Chief Executive Officer and Director
February 10, 2012
Todd Zelek
(Principal Executive Officer)
/s/ Igor Gorodnitsky
President
February 10, 2012
Igor Gorodnitsky
/s/ R.L. Hartshorn
Chief Financial Officer
February 10, 2012
R.L. Hartshorn
(Principal Financial Officer and
27
YES
¨
NO
x
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
January 29, 2007,
Inception,
For the Three Months Ended
For the Six Months Ended
Through
December 31,
December 31,
December 31,
2011
2010
2011
2010
2011
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenue
$
114,154
$
248,600
$
114,154
$
248,600
$
704,080
Cost of revenue
23,014
36,700
23,014
36,700
114,158
Gross profit
91,140
211,900
91,140
211,900
589,922
General and administrative expenses
419,450
915,316
701,067
1,824,447
11,993,349
Research and development expenses
34,141
104,817
62,205
346,070
5,350,599
Total operating expenses
453,591
1,020,133
763,272
2,170,517
17,343,948
Loss from operations
(362,451)
(808,233)
(672,132)
(1,958,617)
(16,754,026)
Interest expense and other
(77,197)
(9,544)
(129,801)
(22,237)
(717,570)
Loss before income taxes
(439,648)
(817,777)
(801,933)
(1,980,854)
(17,471,596)
Income taxes
-
-
-
-
-
Net loss
$
(439,648)
$
(817,777)
$
(801,933)
$
(1,980,854)
$
(17,471,596)
Deemed dividends to preferred stockholders
(1,500)
(1,500)
(3,000)
(3,000)
(181,827)
Net loss available to common stockholders
$
(441,148)
$
(819,277)
$
(804,933)
$
(1,983,854)
$
(17,653,423)
Net loss available to common shareholders per share:
Basic and diluted
$
(0.00)
$
(0.01)
(0.01)
$
(0.01)
Weighted average shares outstanding:
Basic and diluted
158,306,426
136,734,911
156,766,312
134,613,680
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited)
Deficit
Accumulated
During the
Series A Preferred
Common Stock
Additional Paid-in
Development
Shares
Amount
Shares
Amount
Capital
Stage
Total
Balance at inception, January 29, 2007
-
$
-
-
$
-
$
-
$
-
$
-
Common stock issued as payment for services on January 29, 2007
42,993,630
42,994
(21,994)
21,000
Common stock issued as payment for services on March 31, 2008
6,428,904
6,429
1,123,971
1,130,400
Common stock issued as payment for services on April 16, 2008
51,180
51
8,949
9,000
Common stock issued as payment for services on April 22, 2008
102,360
102
17,898
18,000
Common stock issued as payment for services on June 18, 2008
3,787,320
3,788
662,212
666,000
Common stock sold for cash on June 30, 2008
2,047,200
2,047
497,953
500,000
Amortization of discount on convertible preferred stock
47,879
(47,879)
-
Net loss
(2,681,782)
(2,681,782)
Balance at June 30, 2008
-
-
55,410,594
55,411
2,336,868
(2,729,661)
(337,382)
Common stock sold in connection with reverse merger for cash on October 3, 2008
2,149,560
2,150
122,850
125,000
Preferred stock sold for cash on March 17, 2009
111,111
111
99,889
100,000
Preferred stock - beneficial conversion feature
11,111
(11,111)
-
Common stock sold for cash on April 22, 2009
499,998
500
99,500
100,000
Common stock sold for cash on June 4, 2009
499,998
500
99,500
100,000
Common stock sold for cash on June 22, 2009
300,000
300
49,700
50,000
Common stock sold for cash on June 30, 2009
300,000
300
49,700
50,000
Bio common stock outstanding before reverse merger on October 3, 2008
27,840,534
27,840
(27,840)
-
Common stock issued as payment for services on September 22, 2008
150,000
150
17,850
18,000
Common stock issued as payment for services on December 3, 2008
450,000
450
187,150
187,600
Common stock issued as payment for services on December 17, 2008
300,000
300
131,800
132,100
Common stock issued as payment for services on February 27, 2009
590,565
591
156,893
157,484
Common stock issued as payment for services on March 11, 2009
86,550
86
26,853
26,939
Common stock issued as payment for services on March 22, 2009
150,000
150
50,350
50,500
Common stock issued as payment for services on April 23, 2009
29,415
29
9,285
9,314
Common stock issued as payment for services on May 28, 2009
152,379
152
38,959
39,111
Common stock issued as payment for services on June 4, 2009
37,500
38
9,837
9,875
Common stock issued as payment for services on June 30, 2009
37,500
38
8,712
8,750
Warrants issued with convertible debt in December 2008, January 2009 and February 2009
49,245
49,245
Amortization of discount on convertible preferred stock
107,835
(107,835)
-
Warrants issued as payment for services on May 27, 2009
56,146
56,146
Warrants issued as payment for services on June 3, 2009
84,219
84,219
Warrants issued as payment for services on June 30, 2009
5,678
5,678
Issuance of stock options as payment for services on August 8, 2008
229,493
229,493
Issuance of stock options as payment for services on October 1, 2008
4,598
4,598
Issuance of stock options as payment for services on October 7, 2008
22,770
22,770
Issuance of stock options as payment for services on October 21, 2008
47
47
Issuance of stock options as payment for services on October 28, 2008
33
33
Issuance of stock options as payment for services on January 19, 2009
50,571
50,571
Net loss
(2,495,991)
(2,495,991)
Balance at June 30, 2009
111,111
$
111
88,984,593
$
88,985
$
4,089,602
$
(5,344,598)
$
(1,165,900)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) (Continued)
Deficit
Accumulated
During the
Series A Preferred
Common Stock
Additional Paid-in
Development
Shares
Amount
Shares
Amount
Capital
Stage
Total
Balance at June 30, 2009
111,111
$
111
88,984,593
$
88,985
$
4,089,602
$
(5,344,598)
$
(1,165,900)
Common stock issued as payment for services on July 27, 2009
17,358,000
17,358
3,886,279
3,903,637
Common stock issued as payment for services on August 5, 2009
165,000
165
44,935
45,100
Common stock issued as payment for services on September 16, 2009
190,011
190
42,209
42,399
Common stock issued as payment for services on October 7, 2009
130,500
131
42,500
42,631
Common stock issued as payment for services on October 16, 2009
100,911
101
34,209
34,310
Common stock issued as payment for services on October 23, 2009
30,000
30
9,270
9,300
Common stock issued as payment for services on October 29, 2009
37,500
38
13,463
13,501
Common stock issued as payment for services on November 3, 2009
37,500
37
13,464
13,501
Common stock issued as payment for services on November 10, 2009
35,102
35
12,251
12,286
Common stock issued as payment for services on November 16, 2009
1,505,000
1,505
405,944
407,449
Common stock issued as payment for services on November 30, 2009
60,000
60
17,340
17,400
Common stock issued as payment for services on December 4, 2009
49,157
49
12,240
12,289
Common stock issued as payment for services on January 11, 2010
121,286
121
30,200
30,321
Common stock issued as payment for services on February 1, 2010
5,125,102
5,125
1,071,146
1,076,271
Common stock issued as payment for services on February 11, 2010
500,000
500
109,500
110,000
Common stock issued as payment for services on February 15, 2010
127,500
128
26,648
26,776
Common stock issued as payment for services on February 23, 2010
135,000
135
26,865
27,000
Common stock issued as payment for services on March 5, 2010
346,098
346
82,897
83,243
Common stock issued as payment for services on March 12, 2010
70,000
70
13,455
13,525
Common stock issued as payment for services on March 22, 2010
50,000
50
8,450
8,500
Common stock issued as payment for services on April 12, 2010
127,282
127
16,420
16,547
Common stock issued as payment for services on April 19, 2010
100,000
100
16,900
17,000
Common stock issued as payment for services on April 29, 2010
1,700,000
1,700
253,300
255,000
Common stock issued as payment for services on May 10, 2010
773,750
774
115,288
116,062
Common stock issued as payment for services on May 24, 2010
219,092
219
43,599
43,818
Common stock issued as payment for services on June 1, 2010
163,794
164
29,319
29,483
Common stock issued as payment for services on June 9, 2010
333,333
333
59,667
60,000
Common stock issued as payment for services on June 14, 2010
46,544
47
8,331
8,378
Common stock issued for debt and accrued interest conversion on August 7, 2009
1,122,375
1,122
189,681
190,803
Conversion feature on convertible notes payable
63,601
63,601
Common stock sold for cash on October 13, 2009
208,104
208
34,156
34,364
Common stock sold for cash on October 16, 2009
2,980,734
2,981
493,808
496,789
Common stock sold for cash on November 4, 2009
217,117
217
36,183
36,400
Common stock sold for cash on November 17, 2009
421,529
422
71,748
72,170
Common stock sold for cash on December 4, 2009
352,451
352
59,565
59,917
Common stock sold for cash on January 6, 2010
58,058
58
9,812
9,870
Common stock sold for cash on February 4, 2010
888,235
888
150,112
151,000
Common stock sold for cash on March 2, 2010
743,746
744
125,693
126,437
Common stock sold for cash on March 12, 2010
352,941
353
59,647
60,000
Common stock sold for cash on April 19, 2010
125,000
125
14,875
15,000
Common stock sold for cash on June 1, 2010
700,000
700
69,300
70,000
Common stock issued for conversion of note payable on June 1, 2010
2,789,217
2,789
276,133
278,922
Common stock sold for cash on June 24, 2010
1,000,000
1,000
99,000
100,000
Warrants issued as payment for services on July 15, 2009
13,205
13,205
Warrants issued as payment for services on February 11, 2010
131,376
131,376
Conversion feature of note payable on June 1, 2010
223,137
223,137
Dividends on preferred stock
(6,000)
(6,000)
Net loss
(8,196,462)
(8,196,462)
Balance at June 30, 2010
111,111
$
111
130,581,562
$
130,582
$
12,656,723
$
(13,547,060)
$
(759,644)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) (Continued)
Deficit
Accumulated
During the
Series A Preferred
Common Stock
Additional Paid-in
Development
Shares
Amount
Shares
Amount
Capital
Stage
Total
Balance at June 30, 2010
111,111
$
111
130,581,562
$
130,582
$
12,656,723
$
(13,547,060)
$
(759,644)
Common stock issued as payment for services on July 8, 2010
349,571
350
52,086
52,436
Common stock issued as payment for services on August 3, 2010
1,854,009
1,854
350,406
352,260
Common stock issued as payment for services on August 30, 2010
75,000
75
11,175
11,250
Common stock issued as payment for services on September 8, 2010
237,192
237
35,342
35,579
Common stock issued as payment for services on October 1, 2010
473,517
474
70,554
71,028
Common stock issued as payment for services on November 1, 2010
1,020,482
1,020
131,643
132,663
Common stock issued as payment for services on November 22, 2010
100,000
100
11,900
12,000
Common stock issued as payment for services on December 7, 2010
459,056
459
50,037
50,496
Common stock issued as payment for services on January 10, 2011
116,916
117
13,913
14,030
Common stock issued as payment for services on February 14, 2011
1,264,883
1,265
137,872
139,137
Common stock issued as payment for services on March 10, 2011
219,767
220
21,757
21,977
Common stock issued as payment for services on March 22, 2011
510,000
510
50,490
51,000
Common stock issued as payment for services on April 1, 2011
816,145
816
80,799
81,615
Common stock issued as payment for services on May 17, 2011
276,203
276
27,343
27,619
Common stock issued as payment for services on June 13, 2011
333,924
334
33,058
33,392
Common stock issued as payment for services on June 14, 2011
8,096,990
8,097
689,603
697,700
Common stock sold for cash on August 3, 2010
593,211
593
58,728
59,321
Common stock sold for cash on October 1, 2010
661,000
661
78,659
79,320
Common stock sold for cash on November 1, 2010
1,400,000
1,400
142,600
144,000
Common stock sold for cash on November 22, 2010
350,000
350
41,650
42,000
Common stock sold for cash on January 10, 2011
110,000
110
11,990
12,100
Common stock sold for cash on February 14, 2011
1,920,000
1,920
190,080
192,000
Common stock sold for cash on March 2, 2011
290,000
290
28,710
29,000
Common stock sold for cash on March 10, 2011
176,923
177
14,823
15,000
Common stock issued as payment of short-term loan into stock on February 14, 2011
1,000,000
1,000
99,000
100,000
Warrants issued as payment for services on November 22, 2010
46,735
46,735
Common stock issued for conversion of note payable on February 8, 2011
30,769
31
1,967
1,998
Common stock issued for conversion of note payable on February 11, 2011
15,385
15
985
1,000
Common stock issued for conversion of note payable on February 16, 2011
26,154
26
1,674
1,700
Common stock issued for conversion of note payable on February 17, 2011
15,385
15
985
1,000
Common stock issued for conversion of note payable on February 22, 2011
21,927
22
1,475
1,497
Common stock issued for conversion of note payable on February 28, 2011
55,749
56
3,568
3,624
Common stock issued for conversion of note payable on March 7, 2011
24,796
25
1,506
1,531
Common stock issued for conversion of note payable on March 8, 2011
18,100
18
982
1,000
Common stock issued for conversion of note payable on March 14, 2011
109,783
110
5,956
6,066
Common stock issued for conversion of note payable on March 28, 2011
51,282
51
2,949
3,000
Common stock issued for conversion of note payable on March 30, 2011
59,829
60
3,440
3,500
Common stock issued for conversion of note payable on April 4, 2011
59,829
60
3,440
3,500
Common stock issued for conversion of note payable on April 5, 2011
24,376
24
1,402
1,426
Amortization of restricted stock issued for services
786,275
786,275
Dividends on preferred stock
(6,000)
(6,000)
Net loss
(3,295,428)
(3,295,428)
Balance at June 30, 2011
111,111
$
111
153,799,715
$
153,800
$
15,954,280
$
(16,848,488)
$
(740,297)
Common stock issued as payment for services on July 13, 2011
379,449
380
25,968
26,348
Common stock issued as payment for services on August 19, 2011
198,879
199
10,541
10,740
Common stock issued as payment for services on August 22, 2011
230,000
230
12,191
12,421
Common stock issued as payment for services on September 29, 2011
366,924
367
13,787
14,154
Common stock issued for conversion of note payable on August 16, 2011
287,356
287
20,786
21,073
Common stock issued for conversion of note payable on August 17, 2011
391,850
392
25,949
26,341
Common stock issued for conversion of note payable on August 19, 2011
391,850
392
25,949
26,341
Common stock issued for conversion of note payable on August 22, 2011
288,401
288
17,216
17,504
Common stock issued for conversion of note payable on September 13, 2011
30,769
31
1,508
1,539
Common stock issued for conversion of note payable on September 15, 2011
46,154
46
2,262
2,308
Common stock issued for conversion of note payable on September 16 2011
76,923
77
4,538
4,615
Common stock sold for cash on August 22, 2011
600,000
600
34,400
35,000
Common stock issued for conversion of note payable on October 4, 2011
130,474
130
4,818
4,948
Common stock issued for conversion of note payable on October 5, 2011
178,891
179
6,943
7,122
Common stock issued for conversion of note payable on October 6, 2011
429,338
429
16,663
17,092
Common stock issued for conversion of note payable on October 10, 2011
35,778
36
1,388
1,424
Common stock issued for conversion of note payable on October 11, 2011
194,231
194
6,929
7,123
Common stock issued as payment for services on October 25, 2011
44,000
44
1,653
1,697
Common stock issued as payment for services on November 1, 2011
353,959
354
13,300
13,654
Common stock issued as payment for services on November 22, 2011
87,500
88
2,612
2,700
To record prepayment of convertible promissory note December 6, 2011
24,591
24,591
Dividends on preferred stock
(3,000)
(3,000)
Net Loss
(801,933)
(801,933)
Balance at December 31, 2011
111,111
$
111
158,542,441
$
158,543
$
16,228,272
$
(17,653,421)
$
(1,266,495)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
January 29, 2007,
Inception,
For the Six Months Ended
Through
December 31,
December 31,
2011
2010
2011
Operating activities:
Net loss
$
(801,933)
$
(1,980,854)
$
(17,471,596)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization
24,719
10,456
75,429
Warrants issued in connection with convertible notes payable
-
-
49,245
Amortization of convertible loan discount
83,396
-
404,858
Common stock issued for services
81,713
1,503,987
11,612,314
Stock option compensation
-
-
307,512
Warrants issued for services
-
46,735
337,359
Change in value of derivatives
(3,536)
-
15,661
Equipment write-down
-
-
5,399
Patent write-down
21,758
-
35,258
Effect of changes in:
Inventory
(32,957)
-
(86,013)
Prepaid expenses and other current assets
1,175
2,570
(2,162)
Advances to related parties
(25,560)
-
(25,560)
Deposits/Ars
-
-
(9,500)
Bank overdraft, net
-
10,280
-
Accounts payable and accrued expenses
72,408
32,513
269,802
Accrued payroll
302,029
(3,635)
730,266
Advances
-
67,896
36,533
Deferred revenue
100,000
(33,811)
116,951
Net cash used in operating activities
(176,788)
(343,863)
(3,598,244)
Investing activities:
Purchase of property and equipment
(9,343)
-
(108,535)
Payments for systems
-
(132,898)
(152,721)
Payments for patents
(16,878)
-
(151,490)
Net cash used in investing activities
(26,221)
(132,898)
(412,746)
Financing activities:
Proceeds from (payments on) bank loan borrowings
(103,839)
(25,990)
382,271
Proceeds from sales of preferred stock
-
-
725,000
Proceeds from convertible notes payable
132,500
-
518,712
Payments on convertible notes payable
(47,500)
-
(102,500)
Proceeds from sales of common stock
35,000
324,641
2,139,688
Payments on related party short-term loans
(15,750)
-
(15,750)
Proceeds from related party short-term loans
-
-
15,750
Proceeds from short-term loans
100,000
187,025
284,000
Advances
100,000
-
100,000
Payments of short term loans
-
(9,000)
(24,000)
Net cash provided by financing activities
200,411
476,676
4,023,171
Net increase in cash
(2,598)
(85)
12,181
Cash, beginning of period
14,779
270
-
Cash, end of period
$
12,181
$
185
$
12,181
Supplemental disclosures of cash flow information:
Cash paid for interest
$
39,056
$
16,248
$
232,648
Cash paid for income taxes
$
1,600
$
1,600
$
8,328
Supplemental disclosure of non-cash investing and financing activities:
Warrants issued in connection with preferred stock
$
-
$
-
$
155,714
Beneficial conversion feature on preferred stock
$
-
$
-
$
11,111
Conversion of preferred to common shares in reverse merger
$
-
$
-
$
625,000
Proceeds from sales of preferred shares used to purchase shares of Bio
$
-
$
-
$
400,000
Conversion of note payable to common stock
$
-
$
-
$
278,922
Conversion of short-term loan to common stock
$
-
$
-
$
100,000
Accrued dividends issued to preferred stockholders
$
3,000
$
3,000
$
16,733
Conversion of convertible notes payable and accrued interest to common stock
$
76,044
$
-
$
297,690
(A Development Stage Company)
December 31, 2011
Year Ended
December 31,
Amount
2012
$
4,738
2013
12,409
2014
19,312
2015
21,453
2016
18,240
Thereafter
35,542
Total
$
111,694
Fair Value
Fair Value Measurements at December 31, 2011
as of
Using Fair Value Heirarchy
Financial Instruments
December 31, 2011
Level 1
Level 2
Level 3
Liabilities:
Derivative liability
77,808
-
-
77,808
Total
$
77,808
$
-
$
-
$
77,808
December 31,
June 30,
2011
2011
Leasehold improvement
$
2,475
2,475
Furniture
26,837
26,837
Office equipment
1,499
1,500
Equipment
68,380
68,380
Systems
121,728
112,474
220,919
211,666
Less: accumulated depreciation and amortization
(75,463)
(52,322)
$
145,456
159,344
Six Months Ended
December 31,
2011
Expected life in years
0.3 - 1.0
Stock price volatility
0.0%
Risk free interest rate
0.06% - 0.16%
Expected dividends
None
Forfeiture rate
0%
Weighted-
Average
Weighted-
Remaining
Average
Contractual
Exercise
Life
Options
Price
(Years)
Outstanding at June 30, 2011
1,810,957
$
0.55
5.73
Granted
-
Forfeited
-
Exercised
-
Outstanding at December 31, 2011
1,810,957
$
0.55
5.23
Exercisable at December 31, 2011
1,810,957
$
0.55
5.23
Options Outstanding
Options Exercisable
Weighted
Weighted
Weighted
Average
Average
Average
Exercise
Number
Remaining
Exercise
Number
Exercise
Price
of Shares
Life (Years)
Price
of Shares
Price
$
0.33
637,297
4.81
$
0.33
637,297
$
0.33
0.67
1,173,660
5.46
0.67
1,173,660
0.67
1,810,957
1,810,957
Weighted-
Average
Weighted-
Remaining
Average
Contractual
Exercise
Life
Warrants
Price
(Years)
Outstanding at June 30, 2011
13,145,618
$
0.41
1.69
Granted
-
-
Exercised
-
-
Outstanding at December 31, 2011
13,145,618
$
0.41
1.19
Exercisable at September 30, 2011
13,145,618
$
0.41
1.19
Warrants Outstanding
Warrants Exercisable
Weighted
Weighted
Weighted
Average
Average
Average
Exercise
Number
Remaining
Exercise
Number
Exercise
Price
of Shares
Life (Years)
Price
of Shares
Price
$
0.20 - 0.37
2,939,374
1.27
$
0.29
2,939,374
$
0.29
0.42 - 0.58
10,206,244
1.16
0.45
10,206,244
0.45
13,145,618
13,145,618
For the Three Months Ended
December 31,
2011
2010
$ Change
% Change
(Unaudited)
(Unaudited)
Revenue
$
114,154
$
248,600
$
(134,446)
100.0%
Cost of sales
23,014
36,700
(13,686)
100.0%
Gross profit
91,140
211,900
(120,760)
100.0%
General and administrative expenses
419,450
915,316
(495,866)
-54.2%
Research and development expenses
34,141
104,817
(70,676)
-67.4%
Total operating expenses
453,591
1,020,133
(566,542)
-55.5%
Loss from operations
(362,451)
(808,233)
445,782
-55.2%
Interest expense
(77,197)
(9,544)
(67,653)
708.9%
Loss before income taxes
(439,648)
(817,777)
378,129
-46.2%
Income tax expense
-
-
-
0.0%
Net loss
$
(439,648)
$
(817,777)
378,129
-46.2%
For the Six Months Ended
December 31,
2011
2010
$ Change
% Change
(Unaudited)
(Unaudited)
Revenue
$
114,154
$
248,600
$
(134,446)
100.0%
Cost of sales
23,014
36,700
(13,686)
100.0%
Gross profit
91,140
211,900
(120,760)
100.0%
General and administrative expenses
701,067
1,824,447
(1,123,380)
-61.6%
Research and development expenses
62,205
346,070
(283,865)
-82.0%
Total operating expenses
763,272
2,170,517
(1,407,245)
-64.8%
Loss from operations
(672,132)
(1,958,617)
1,286,485
-65.7%
Interest expense
(129,801)
(22,237)
(107,564)
483.7%
Loss before income taxes
(801,933)
(1,980,854)
1,178,921
-59.5%
Income tax expense
-
-
-
0.0%
Net loss
$
(801,933)
$
(1,980,854)
1,178,921
-59.5%
Incorporated by Reference
Exhibit
Filed
Number
Exhibit Description
Herewith
Form
Pd. Ending
Exhibit
Filing Date
3(i)(a)
Articles of Incorporation - original name of Bioenergy, Inc.
SB-2
N/A
3.1
October 19, 2006
3(i)(b)
Articles of Incorporation - Amended and Restated
10-Q
December 31, 2008
3-1
February 17, 2009
3(i)( c )
Articles of Incorporation - Amended and Restated
10-Q
June 30, 2009
3-1
May 14, 2009
3(i)(d)
Articles of Incorporation - Amended; increase in authorized shares
8K
N/A
N/A
October 29, 2009
3(i)(e)
Articles of Incorporation - Certificate of Amendment; forward split
10Q
September 30, 2009
3-1
November 16, 2009
10.1
Patent Assignment Agreement between the Company and Roman Gordon dated July 1, 2008.
8K
June 30, 2009
10.1
May 18, 2010
10.2
Patent Assignment Agreement between the Company and Igor Gorodnitsky dated July 1, 2008.
8K
June 30, 2009
10.2
May 18, 2010
10.3
Assignment of Patent Assignment Agreement between the Company and Roman Gordon
8K
June 30, 2009
10.3
May 18, 2010
10.4
Assignment of Patent Assignment Agreement between the Company and Igor Gorodnitsky
8K
June 30, 2009
10.4
May 18, 2010
10.5
Employment Agreement between the Company and Roman Gordon date March 17, 2008
10K/A
June 30, 2009
10.3
October 20, 2011
10.6
Employment Agreement between the Company and Igor Gorodnitsky dated March 17, 2008
10K/A
June 30, 2009
10.4
October 20, 2011
10.7
Employment Agreement with R.L. Hartshorn dated Sept. 22, 2009
X
10.8
Employment and Confidentiality and Invention Assignment Agreement between the Company and Varvara Grichko dated April 30, 2008
10-Q
December 31, 2010
10.3
February 11, 2011
10.12
Board of Director Agreement - James Fuller
X
10.13
Marketing and Collaboration Agreement w/ Desmet Ballestra Group - Nov. 1, 2010
8K
December 31, 2011
10.1
December 7, 2011
10.14
Marketing and Collaboration Agreement w/ Desmet Ballestra Group - Amend #1 - June 1, 2011
8K
December 31, 2011
10.2
December 7, 2011
10.15
Marketing and Collaboration Agreement w/ Desmet Ballestra Group - Amend #2 - Sept 1, 2011
8K
December 31, 2011
10.3
December 7, 2011
10.16
Stock Purchase Warrant Agreement - Pinnacle Financial - Nov. 22, 2010
X
10.22
Common Stock and Warrant Purchase Agreement - Oct. 16, 2009 - Suzahnna Tepper
X
10.23
Common Stock and Warrant Purchase Agreement - Oct. 16, 2009 - G. Electrical
X
10.24
Common Stock and Warrant Purchase Agreement - Oct. 19, 2009 - Star Tech Electric
X
10.25
Common Stock and Warrant Purchase Agreement - Nov. 4, 2009 - G Electrical Service
X
10.26
Common Stock and Warrant Purchase Agreement - Nov. 17, 2009 - G Electrical Service
X
10.27
Common Stock and Warrant Purchase Agreement - Dec. 4, 2009 - G Electrical Service
X
10.28
Common Stock and Warrant Purchase Agreement - Dec. 4, 2009 - Star Tech Electric
X
10.29
Common Stock and Warrant Purchase Agreement - Feb 4, 2010 - Marina Vergilis
X
10.30
Stock Purchase Warrant - Feb 11, 2010 - Undiscovered Equities
X
10.31
Common Stock and Warrant Purchase Agreement - Mar. 2, 2010 - Star Tech
X
10.32
Common Stock and Warrant Purchase Agreement - Mar. 2, 2010 - G Electrical Service
X
10.33
Common Stock and Warrant Purchase Agreement - Mar. 2, 2010 - AMPM
X
10.34
Common Stock and Warrant Purchase Agreement - Mar. 12, 2010 - Suzhnna Tepper
X
10.35
Common Stock and Warrant Purchase Agreement - June 1, 2010 - Suzahnna Tepper
X
10.36
Promissory Note - Anna Mosk - January 11, 2010
X
10.40
Convertible Note Payable - Prolific Group LLC - $25,000
X
10.41
Convertible Note Payable - Tripod Group LLC - $30,000
X
10.42
Share Issuance Agreement - December 6, 2011
X
10.43
Loan Agreement - Desmet Ballestra - Oct. 26, 2010
X
14.1
Code of Business Conduct and Ethics*
10-K
June 30, 2011
September 28, 2011
31.1
Certificat of Principal Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
X
31.2
Certificat of Principal Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
X
32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C Section 1350, as adopted
X
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted
X
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**
XBRL Instance Document
X
101.SCH**
XBRL Taxonomy Extension Schema
X
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase
X
101.DEF**
XBRL Taxonomy Extension Definition Linkbase
X
101.LAB**
XBRL Taxonomy Extension Label Linkbase
X
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase
X
*
In accordance with Regulation S-K 406 of the Securities Act of 1934, we undertake to provide to any person
without charge, upon request, a copy of our "Code of Business Conduct and Ethics". A copy may be requested
by sending an email to info@cavitationtechnologies.com.
**
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a
registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or
Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
Chairman of the Board
Accounting Officer)
Exhibit 10.7
CONSULTING AGREEMENT
This Consulting Agreement is effective September 22, 2009 between Cavitation Technologies, Inc. ("Company") and R.L. Hartshorn ("Consultant").
1. Scope and Term of Services . Consultant shall, upon request by Company, provide the services specified in Exhibit A, Section 1. Consultant shall coordinate Consultant's efforts and report Consultant's progress regularly to the individual specified in Exhibit A, Section 2. Consultant shall provide such services during the period shown in Exhibit A, Section 3.
2. Payment . Company shall pay Consultant as specified in Exhibit A, Section 4. Payments to Consultant shall not be subject to income or employment tax withholding and shall be reported on Form 1099. Company has no obligation to reimburse Consultant for any expenses incurred by Consultant under this Agreement, unless specifically authorized in writing by Company. Consultant hereby indemnifies Company against any obligation imposed on Company to pay withholding taxes or similar items or resulting from a court's or governmental entity's determination that Consultant is not an independent contractor to Company.
3. Confidentiality .
(a) Consultant shall keep confidential all technical, customer, business and financial information relating to Company's business disclosed by Company or its customers to Consultant directly or indirectly in writing, orally or by inspection ("Information"). Consultant will not, during or after Consultant's consulting relationship with Company, (i) disclose any Information directly or indirectly to any person or entity other than an employee or affiliate of Company, acting in that capacity and for Company's benefit or (ii) use any Information other than for Company's benefit. These obligations do not apply to Information which has been published or is available generally to the public, except where publication or availability results from Consultant's acts.
(b) Consultant will not disclose to Company, or induce Company to use, any confidential or proprietary information of a third party. Consultant represents that Consultant's performance of this Agreement does not and will not conflict with any agreement binding on Consultant to keep confidential a third party's proprietary information or trade secrets.
(c) Upon Company's request Consultant will return to Company any Information in tangible form possessed by Consultant.
4. Ownership of Inventions .
(a) Any invention, copyrightable material, technology and know-how created during and relating to consulting services under this Agreement and any related intellectual property rights ("Inventions") shall be owned by Company and are hereby assigned to Company. Consultant shall
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promptly disclose to Company all Inventions which Consultant may conceive or make during the term of this Agreement.
(b) Whenever requested by Company, Consultant shall execute and deliver documents considered necessary by Company to apply for and maintain intellectual property protection for the benefit of company in any country, or to perfect Company's ownership of and exclusive right to Inventions. Consultant irrevocably appoints company and its authorized agents as Consultant's attorney-in-fact, to execute and file any such documents if Consultant is unavailable, unable or unwilling to do so. Consultant shall cooperate at Company's expense as requested by Company in prosecuting or defending any litigation or other proceeding involving any Invention in any country.
(c) If Consultant incorporates into any Invention any invention, copyrightable material, technology or know-how owned by Consultant or in which Consultant has an interest, Company shall have a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license to make, have made, modify, use and sell such item in connection with such invention.
5. Subcontractors . If Consultant is an entity, then Consultant shall obtain a written agreement (naming Company as a third party beneficiary) from each employee of or consultant to Consultant which binds such individual to the provisions of Sections 3 and 4.
6. Conflicts of Interest . Consultant represents that this Agreement does not conflict with any agreement or obligation binding on Consultant. Consultant represents that Consultant is not presently retained by any entity that designs, manufactures or sells products competitive with Company's present products, or proposed products disclosed to Consultant. Consultant shall not accept such retention without Company's approval while Consultant is providing services to Company.
7. Independent Contractor Relationship . The parties are independent contractors and neither party is the agent of the other for any purpose. Neither party has authority to assume any obligation for the other or to make any representation on behalf of the other. Consultant is not an employee of Company and is not entitled to any benefits provided by Company to its employees.
8. Arbitration and Equitable Relief . Any dispute arising out of this Agreement shall be settled by arbitration held in Los Angeles, California, in accordance with the rules of the American Arbitration Association. The arbitrator may grant injunctions or other equitable relief. The arbitrator's decision shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator's decision in any court of competent jurisdiction. Company and Consultant shall each pay 50% of the costs of arbitration and shall each separately pay its respective counsel fees and expenses. Consultant agrees that it would be impossible or inadequate to measure Company's damages from Consultant's breach of Sections 3, 4 or 6. Accordingly, if Consultant breaches Sections 3, 4 or 6, Company may, in addition to any other right or remedy, obtain an injunction restraining such breach or threatened breach and specific performance of such provision, without delivery by Company of a bond or other security.
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9. Termination . This Agreement may be terminated by either party upon 15 days written notice to the other party.
10. Miscellaneous . Any notice under this Agreement shall be in writing and shall be deemed delivered 5 days after being mailed to the other party at the address set forth at the end of this Agreement or at such other address given pursuant to this provision, and shall also be considered delivered upon transmission by facsimile if a confirming letter is mailed on the same day. This Agreement is the entire agreement regarding consulting services between the parties. The Agreement shall be governed by California law without regard to conflict of law provisions thereof. This Agreement may be modified only by a subsequent written instrument signed by Company and Consultant. Sections 3, 4, 5, 6 and 8 shall survive any termination of this Agreement or of consulting services. Consultant may not subcontract any services to be provided under this Agreement without Company's prior written consent. This Agreement shall bind and benefit the heirs, legal representatives, successors and assigns of the parties.
CAVITATION TECHNOLOGIES, INC. |
CONSULTANT |
By: /s/ Roman Gordon |
By: /s/ R.L. Hartshorn |
Title: Roman Gordon, CEO |
Title: CFO |
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EXHIBIT A
1. Scope of Services . Consultant shall act as the Company's Chief Financial Officer provide the Company with marketing and business plan writing purposes and Consultant shall provide audit prep services.
2. Supervisor . Consultant shall report to Roman Gordon, CEO of the Company.
3. Term of Services . 12 months unless terminated by either party
4. Payment 75,000 shares for services rendered between September 22, 2009 and March 22, 2010 and cash payments on a to be determined basis thereafter.
Exhibit 10.12
DIRECTOR AGREEMENT
DIRECTOR AGREEMENT (this "Agreement"), dated as of January 20, 2010, by and between Cavitation Technologies, Inc., a Nevada corporation ("Company"), and James Fuller ("Fuller").
WITNESSETH:
WHEREAS , Company believes that it is in its own best interests and in the best interests of its stockholders that the Audit Chairman of the audit committee ("Audit Chairman") of Company's board of directors (the "Board") be an individual who is not an employee of Company; and
WHEREAS , Company desires to retain the services of Fuller in the capacity of Audit Chairman as well as adding Fuller to the Company's Board and Fuller desires to provide such services in such capacity, upon the terms and subject to the conditions hereinafter set forth; and
WHEREAS , the Board has approved the terms of this Agreement.
NOW, THEREFORE , in consideration of the foregoing and of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Election as Director; Appointment. Company agrees to appoint Fuller as a member of the Board and as Audit Chairman, both as of the date hereof, and agrees to use its best efforts and powers to sustain and continue Fuller's election as a member of the Board for successive one year terms at each annual meeting of stockholders of Company and each special meeting of stockholders of Company convened for such purpose unless this Agreement is terminated sooner pursuant to Section 4 hereof (the "Term"). During the Term, at all times that Fuller is a member of the Board, he shall be appointed as Audit Chairman.
2. Duties and Extent of Services .
(a) During the Term, Fuller shall serve as Audit Chairman as well as serving as a regular member of the Board, and, in such capacity, shall provide those services required of a director under Company's articles of incorporation and bylaws, as both may be amended from time to time, and under the Nevada Revised Statutes, the federal securities laws and other state and federal laws and regulations, as applicable, and shall render such services as are customarily associated with and are incident to the position of Audit Chairman and a member of the Board and such other services as Company may, from time to time, reasonably require of him consistent with such position. Such duties and responsibilities shall include, but shall not be limited to, chairing all meetings of the audit committee and participating in all meetings of the Board.
(b) Fuller shall faithfully, competently and diligently perform to the best of his ability all of the duties required of him as Audit Chairman and as a member of the Board.
(c) The parties acknowledge that the position of Audit Chairman and as a member of the Board does not involve Fuller acting as an executive officer of the Company.
3. Compensation.
(a) Initial Compensation: As compensation for Fuller's entering into this Agreement and performing his services hereunder, (i) concurrently herewith the Company is granting Fuller 37,500 shares of Common Stock of the Company and (ii) the Company shall grant Fuller an additional 37,500 shares every subsequent quarter during which Fuller serves as Audit Chairman and a member of the Board.
(b) Other Benefits. During the Term Fuller shall be entitled to any benefits made available to non-executive members of the Board generally.
(c) Expenses. Company agrees to reimburse Fuller for all reasonable and necessary travel, and other out-of-pocket business expenses incurred or expended by him in connection with the performance of his duties hereunder upon presentation of proper expense statements or vouchers or such other supporting information as Company may reasonably require of Fuller.
4. Termination . The Company shall have the right to remove Fuller from, or not reelect Fuller to, the Board and shall have the right to remove Fuller from, or not reelect Fuller to, the position of Audit Chairman. Fuller shall have the right, exercisable at any time during the Term, upon thirty (30) days written notice to Company, to resign as Audit Chairman or as a member of the Board.
5. Independent Contractor . Fuller is an independent contractor and will not be deemed an employee of Company for purposes of employee benefits, income tax withholding, FICA taxes, unemployment benefits or otherwise.
6. Entire Agreement . This Agreement is intended by the parties as a final expression of their agreement with respect to the subject matter hereof and is intended as a complete and exclusive statement of the terms and conditions thereof and supersedes and replaces all prior negotiations and agreements between the parties hereto, whether written or oral, with respect to the subject matter hereof.
7. Governing Law .
(a) This Agreement shall be governed by and construed under the laws of the State of California, applicable to contracts to be wholly performed in such State, without regard to the conflict of laws principles thereof.
(b) Any action to enforce any of the provisions of this Agreement shall be brought in a court of the State of California in the county of Los Angeles or in a Federal court located within the county of Los Angeles. The parties consent to the jurisdiction of such courts and to the service of process in any manner provided by California law. Each party irrevocably waives any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such court and any claim that such suit, action or proceeding brought in such court has been brought in an inconvenient forum and agrees that service of process in accordance with the foregoing sentences shall be deemed in every respect effective and valid personal service of process upon such party.
8. Amendment . This Agreement may be amended, modified or superseded, and any of the terms hereof may be waived, only by a written instrument executed by the parties hereto.
9. Assignability . The obligations of Fuller may not be delegated and Fuller may not, without Company's written consent thereto, assign, transfer, convoy, pledge, encumber, hypothecate or otherwise dispose of this Agreement or any interest herein. Any such attempted delegation or disposition shall be null and void and without effect. Company and Fuller agree that this Agreement and all of Company's rights and obligations hereunder may be assigned or transferred by Company to and shall be assumed by and be binding upon any successor to Company. The term "successor" means, with respect to Company or any of its subsidiaries, any corporation or other business entity which, by merger, consolidation, purchase of the assets or otherwise acquires all or a material part of the assets of Company.
10. Severability. If any provision of this Agreement or any part thereof is held to be invalid or unenforceable, the same shall in no way affect any other provision of this Agreement or remaining part thereof; which shall be given full effect without regard to the invalid or unenforceable part thereof.
11. Notices . All notices, requests, demands and other communications required or permitted to be given or made under this Agreement, shall be given or made in writing by registered or certified mail, return receipt requested, or by overnight carrier service or by facsimile transmission and will be deemed to have been given or made on the date following receipt or attempted delivery at the following locations:
To Fuller:
James Fuller
2548 Filbert Street
San Francisco, CA 94123
To Company;
Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, California 91311
Attention: Chief Executive Officer
Either party may change the address to which notices shall be sent by sending written notice of such change of address to the other party. Any such notice shall be deemed given, if delivered personally, upon receipt; if telecopied, when telecopied; if sent by courier service providing for next-day delivery, the next business day following deposit with such courier service; and if sent by certified or registered mail, three days after deposit (postage prepaid) with the U.S. mail service.
12. Indemnification . Company hereby agrees to indemnify and hold harmless Fuller, his affiliates (and such affiliates' directors, officers, employees, agents and representatives) and permitted assigns, to the fullest extent permitted under Nevada law, from and against any and all losses, damages, liabilities, obligations, costs or expenses which are caused by or arise out of (i) any breach or default in the performance by the Company of any covenant or agreement of the Company contained in this Agreement, and (ii) any breach of warranty or inaccurate or erroneous representation made by the Company herein, and (iii) any and all actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees) incident to any of the foregoing. The Company shall advance any expenses reasonably incurred by Fuller in defending an indemnifiable action hereunder, with such expenses to be reimbursed by Fuller only in the event that a court of competent jurisdiction enters a binding judgment, order or decree that Fuller acted in bad faith or in a manner he reasonably believed not to be in the best interests of the Company.
13. Paragraph Headings . The paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
14. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.
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CAVITATION TECHNOLOGIES, INC. |
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By: |
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/s/Roman Gordon, CEO
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/s/James Fuller, Board Member |
Exhibit 10.16
Warrant No. C-
Initially Issued November 22, 2010
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to Pinnacle Financial Group and Insurance Services, Inc (the "Investor"), and his assigns, the right to purchase from the Company a 600,000 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.60 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on November 22, 2013 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
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(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: November 22, 2010
CAVITATION TECHNOLOGIES, INC
By: ____________________________
Title: _____________________________
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
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Exhibit 10.22
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of October 16, 2009, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and Suzahnna Tepper (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 330,000 shares of its Common Stock at a purchase price of $0.50 per share and to issue to the Investor a 3 year warrant to purchase 330,000 shares of Common Stock at an exercise price of $1.25 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 330,000 shares of Company Common Stock at a purchase price of $0.50 per share for an aggregate purchase price of $165,000.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 330,000 shares of Common Stock of the Company exercisable at $1.25 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
165,000
Amount of Investment
SUZAHNNA TEPPER
/s/ SUZAHNNA TEPPER
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued October 16, 2009
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to Suzahnna Tepper (the "Investor"), and his assigns, the right to purchase from the Company 210,000 shares of Common Stock (the "Shares"). The exercise price per Share shall be $1.25 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on October 16, 2012 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: October 16, 2009
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
|
_________________________________
_________________________________
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Exhibit 10.23
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of October 16, 2009, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and G Electrical Services Co (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 88,600 shares of its Common Stock at a purchase price of $0.50 per share and to issue to the Investor a 3 year warrant to purchase 88,600 shares of Common Stock at an exercise price of $1.25 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 88,600 shares of Company Common Stock at a purchase price of $0.50 per share for an aggregate purchase price of $44,300.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 88,600 shares of Common Stock of the Company exercisable at $1.25 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
44,300
Amount of Investment
G ELECTRICAL SERVICES CO
BY: /s/_____________________
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued October 16, 2009
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to G Electrical Services Co (the "Investor"), and his assigns, the right to purchase from the Company 88.600 shares of Common Stock (the "Shares"). The exercise price per Share shall be $1.25 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on October 16, 2012 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: October 16, 2009
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
|
_________________________________
_________________________________
|
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Exhibit 10.24
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of October 19, 2009, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and Star Tech Electric Co (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 224,978 shares of its Common Stock at a purchase price of $0.50 per share and to issue to the Investor a 3 year warrant to purchase 224,978 shares of Common Stock at an exercise price of $1.25 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 224,978 shares of Company Common Stock at a purchase price of $0.50 per share for an aggregate purchase price of $112,488.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 224,978 shares of Common Stock of the Company exercisable at $1.25 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
112,488
Amount of Investment
STAR TECH ELECTRIC CO
BY: /s/____________________
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued October 19, 2009
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to Star Tech Electric Co (the "Investor"), and his assigns, the right to purchase from the Company 224,978 shares of Common Stock (the "Shares"). The exercise price per Share shall be $1.25 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on October 19, 2012 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: October 19, 2009
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
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Exhibit 10.25
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of November 4, 2009, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and G Electrical Services Co (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 214,117 shares of its Common Stock at a purchase price of $0.17 per share and to issue to the Investor a 3 year warrant to purchase 214,117 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 214,117 shares of Company Common Stock at a purchase price of $0.17 per share for an aggregate purchase price of $36,400.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 214,117 shares of Common Stock of the Company exercisable at $-0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
36,400
Amount of Investment
G ELECTRICAL SERVICES CO
BY: /s/____________________
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued November 4, 2009
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to G Electrical Services Co (the "Investor"), and his assigns, the right to purchase from the Company 214,117 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on November 4, 2012 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: November 4, 2009
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
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Exhibit 10.26
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of November 17, 2009, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and G Electrical Services Co (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 421,529 shares of its Common Stock at a purchase price of $0.17 per share and to issue to the Investor a 3 year warrant to purchase 424,529 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 421,529 shares of Company Common Stock at a purchase price of $0.17 per share for an aggregate purchase price of $72,170.00. The 421,529 shares being issued to the Investor reflect a downward adjustment of 3,000 shares due to an over issuance of 3,000 shares to the Investor on 11/4/2009.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 424,529 shares of Common Stock of the Company exercisable at $0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
72,170
Amount of Investment
G ELECTRICAL SERVICES CO
BY: /s/____________________
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued November 17, 2009
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to G Electrical Services Co (the "Investor"), and his assigns, the right to purchase from the Company 424,529 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on November 17, 2012 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: November 17, 2009
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
|
_________________________________
_________________________________
|
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Exhibit 10.27
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of December 4, 2009, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and G Electrical Services Co (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 114,923 shares of its Common Stock at a purchase price of $0.17 per share and to issue to the Investor a 3 year warrant to purchase 114,923 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 114,923 shares of Company Common Stock at a purchase price of $0.17 per share for an aggregate purchase price of $19,537.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 114,923 shares of Common Stock of the Company exercisable at $0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
19,537
Amount of Investment
G ELECTRICAL SERVICES CO
BY: /s/____________________
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued December 4, 2009
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to G Electrical Services Co (the "Investor"), and his assigns, the right to purchase from the Company 114,923 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on December 4, 2012 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: December 4, 2009
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
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_________________________________
_________________________________
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Exhibit 10.28
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of
December 4, 2009, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and
Star Tech Electric Co (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 220,470 shares of its Common Stock at a purchase price of $0.17 per share and to issue to the Investor a 3 year warrant to purchase 220,470 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 220,470 shares of Company Common Stock at a purchase price of $0.17 per share for an aggregate purchase price of $37,480.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 220,480 shares of Common Stock of the Company exercisable at $0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
37,480
Amount of Investment
STAR TECH ELECTRIC CO
BY: /s/____________________
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued December 4, 2009
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to Star Tech Electric Co (the "Investor"), and his assigns, the right to purchase from the Company 220,470 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on December 4, 2012 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: December 4, 2009
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
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_________________________________
_________________________________
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Exhibit 10.29
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of February 4, 2010, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and Marina Vergilis (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 888,235 shares of its Common Stock at a purchase price of $0.17 per share and to issue to the Investor a 3 year warrant to purchase 888,235 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 888,235 shares of Company Common Stock at a purchase price of $0.17 per share for an aggregate purchase price of $151,000.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 888,235 shares of Common Stock of the Company exercisable at $0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
151,000
Amount of Investment
/s/ Marina Vergilis
Marina Vergilis
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued February 4, 2010
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to Marina Vergilis (the "Investor"), and his assigns, the right to purchase from the Company 888,235 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on February 4, 2013 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: February 4, 2010
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
6
NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
|
_________________________________
_________________________________
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Exhibit 10.30
Warrant No. C-
Initially Issued February 11, 2010
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to Undiscovered Equities, Inc. (the "Investor"), and his assigns, the right to purchase from the Company 1,000,000 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.30 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on February 11, 2012 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
1
(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
2
7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
3
(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
4
Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: February 11, 2010
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
5
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
6
NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
|
_________________________________
_________________________________
|
7
Exhibit 10.31
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of March 2, 2010, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and Star Tech Electric Co. (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 108,823 shares of its Common Stock at a purchase price of $0.17 per share and to issue to the Investor a 3 year warrant to purchase 108,823 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 108,823 shares of Company Common Stock at a purchase price of $0.17 per share for an aggregate purchase price of $18,500.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 108,823 shares of Common Stock of the Company exercisable at $0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
18,500
Amount of Investment
STAR TECH ELECTRIC CO.
BY: /s/____________________
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued March 2, 2010
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to Star Tech Electric Co. (the "Investor"), and his assigns, the right to purchase from the Company 108,823 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on March 2, 2013 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: March 2, 2010
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
|
_________________________________
_________________________________
|
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Exhibit 10.32
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of March 2, 2009, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and G Electrical Service Co. (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 44,923 shares of its Common Stock at a purchase price of $0.17 per share and to issue to the Investor a 3 year warrant to purchase 44,923 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 44,923 shares of Company Common Stock at a purchase price of $0.17 per share for an aggregate purchase price of $7,637.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 44,923 shares of Common Stock of the Company exercisable at $0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
7,637
Amount of Investment
G ELECTRICAL SERVICES CO.
BY: /s/____________________
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued March 2, 2010
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to G Electrical Service Co. (the "Investor"), and his assigns, the right to purchase from the Company 44,923 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on March 2, 2013 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: March 2, 2010
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
|
_________________________________
_________________________________
|
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Exhibit 10.33
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of March 2, 2010, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and AM-PM Appliance Service (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 590,000 shares of its Common Stock at a purchase price of $0.17 per share and to issue to the Investor a 3 year warrant to purchase 590,000 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 590,000 shares of Company Common Stock at a purchase price of $0.17 per share for an aggregate purchase price of $100,300.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 590,000 shares of Common Stock of the Company exercisable at $0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
100,300
Amount of Investment
AM-PM APPLIANCE SERVICE
BY: /s/____________________
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued March 2, 2010
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to AM-PM Appliance Service (the "Investor"), and his assigns, the right to purchase from the Company 590,000 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on March 2, 2013 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: March 2, 2010
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
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_________________________________
_________________________________
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Exhibit 10.34
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of March 12, 2010, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and Suzahnna Tepper (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 352,941 shares of its Common Stock at a purchase price of $0.17 per share and to issue to the Investor a 3 year warrant to purchase 352,941 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 352,941 shares of Company Common Stock at a purchase price of $0.17 per share for an aggregate purchase price of $60,000.00, which is payable in part through conversion of indebtedness.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 352,941 shares of Common Stock of the Company exercisable at $0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the
legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
60,000
Amount of Investment
SUZAHNNA TEPPER
/s/ Suzahnna Tepper
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued March 12, 2010
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to Suzahnna Tepper (the "Investor"), and his assigns, the right to purchase from the Company 352,941 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on March 12, 2013 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: March 12, 2010
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
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_________________________________
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Exhibit 10.35
CAVITATION TECHNOLOGIES, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Common Stock and Warrant Unit Purchase Agreement (the "Agreement") is made as of June 1, 2010, among Cavitation Technologies, Inc., a Nevada corporation (the "Company") and Suzahnna Tepper (the "Investor").
The Investor understands that the Company proposes to offer and sell to the Investor 700,000 shares of its Common Stock at a purchase price of $0.10 per share and to issue to the Investor a 3 year warrant to purchase 700,000 shares of Common Stock at an exercise price of $0.42 per share.
1. Purchase and Sale of Common Stock and the Warrants .
a. Common Stock and the Warrants
i. The Common Stock . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase from the Company 700,000 shares of Company Common Stock at a purchase price of $0.10 per share for an aggregate purchase price of $70,000.00.
ii. The Warrants . Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to issue to the Investor at the Closing a Warrant in the form of Exhibit A to purchase 700,000 shares of Common Stock of the Company exercisable at $0.42 per share. The securities for which the Warrants are exercisable into are referred to as the "Warrant Common".
iii. The Securities . The Common Stock, the Warrants and the Warrant Common shall collectively be referred to as the "Securities".
b. Initial Closing .
The purchase and sale of the Units shall take place at the offices of the Company at 10019 Canoga Avenue, Chatsworth, California 91311 ("Closing"). At the Closing, the Company shall deliver to the Investor the Securities, which such Investor is purchasing against delivery to the Company by such Investor of a check, wire transfer, or cancellation of indebtedness in the aggregate amount of the purchase price therefor payable to the Company's order.
2. The Company's Representations and Warranties . The Company represents and warrants to the Investor as follows:
a. Organization and Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
b. Authorization . The execution, delivery and performance of this Agreement by the Company has been duly authorized by all requisite corporate action, and this Agreement constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors' rights. The execution, delivery and performance of this Agreement and compliance with the provisions hereof by the Company does not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default (or an event with which the giving of notice or passage of time, or both could result in a default) under, or result in the creation or imposition of any lien pursuant to the terms of, the Articles of Incorporation or the Bylaws of the Company.
c. Securities . When issued pursuant to the terms of this Agreement, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances caused or created by the Company; provided, however, that the Securities shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement or otherwise required at the time a transfer is proposed.
3. Representations, Warranties of Investor and Restrictions on Transfer
a. Representations and Warranties of Investor . The Investor represents and warrants to the Company with respect to the purchase of Securities under this Agreement as follows:
i. This Agreement constitutes the Investor's valid and legally binding obligation, enforceable in accordance with its terms.
ii. The Investor is acquiring the Securities for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Act"). The Investor understands that the Securities have not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.
iii. The Investor has discussed the Company and its plans, operations and financial condition with its officers and has received all such information as the Investor deems necessary and appropriate to enable the Investor to evaluate the financial risk inherent in making an investment in the Securities. The Investor has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Investor's inquiries.
iv. The Investor realizes that the acquisition of the Securities will be a highly speculative investment. The Investor is able, without impairing the Investor's financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of the Investor's investment. The Investor recognizes that the Company has only recently been organized and that it has a limited financial and operating history and the investment in the Company involves substantial risks. The Investor understands all of the risks related to the acquisition of the Securities. By virtue of the Investor's experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Investor is capable of evaluating the merits and risks of the Investor's investment in the Company and has the capacity to protect the Investor's own interests.
v. The Investor understands that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available. Moreover, the Investor understands that the Company is under no obligation to register the Securities. The Investor is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Investor understands that the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
b. Legends . In addition to any legend imposed by state securities laws, each certificate representing the Securities shall be endorsed with the following legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.The Company need not register a transfer of Securities unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied.
c. Removal of Legends and Transfer Restrictions . The legend relating to the Act endorsed on a stock certificate pursuant to paragraph 4(b) of this Agreement and the stop transfer instructions with respect to such Securities shall be removed and the Company shall issue a stock certificate without such legend to the holder of such Securities if such Shares are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available, or if such holder provides to the Company an opinion of counsel for such holder of the Shares or Note reasonably satisfactory to the Company or a no-action letter or interpretive opinion of the staff of the Commission to the effect that a public sale, transfer or assignment of such Shares or Note may be made without registration and without compliance with any restriction such as Rule 144. Any legend imposed by state securities laws will be removed if the state agency imposing such legend has consented to its removal.
4. Miscellaneous .
a. Governing Law . This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to the conflict of law provisions thereof.
b. Survival . The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Securities.
c. Successors and Assigns . Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
d. Entire Agreement . This Agreement embodies the entire understanding and agreement between each Investor and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
e. Notices, etc. All notices and other communications required or permitted hereunder shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, electronic mail, overnight delivery service or U.S. mail, addressed (a) if to an Investor, at his or her address set forth opposite such Investors name on the last page of this Agreement, or at such other address as such Investor shall have furnished the Company in writing, or (b) if to the Company, at the address of its principal office, or at such other address as the Company shall have furnished to the Investor in writing.
f. Titles and Subtitles . The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
h. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Securities. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.
COMPANY: CAVITATION TECHNOLOGIES, INC.
a Nevada corporation
By: /s/
Roman Gordon
Roman Gordon, CEO
INVESTOR:
$
70,000
Amount of Investment
SUZAHNNA TEPPER
/s/Suzahnna Tepper
[Signature page to Cavitation Technologies, Inc. Common Stock and Warrant Financing]
Warrant No. C-
Initially Issued June 1, 2010
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase Common Stock of
CAVITATION TECHNOLOGIES, INC.
For value received, the Cavitation Technologies, Inc. a Nevada corporation (the "Company") hereby grants to AM-PM Appliance Service (the "Investor"), and his assigns, the right to purchase from the Company 700,000 shares of Common Stock (the "Shares"). The exercise price per Share shall be $0.42 per Share.
The amount and kind of securities purchasable under this Warrant, and the Purchase Price, are subject to adjustment as provided below.
1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company referred to in Section 2(a) below, by the registered holder hereof (the "Holder") in person or by duly authorized attorney, upon surrender of this Warrant and the Assignment Form attached hereto properly endorsed.
2. Exercise of Warrant .
(a) The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time before the close of business on June 1, 2013 by the surrender of this Warrant and the Notice of Exercise attached hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate in writing to the Holder at the address of the Holder appearing on the books of the Company), and upon payment of the Purchase Price of the shares thereby purchased (by cash, check, or cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. The Company agrees that upon due exercise of this Warrant by the Holder, the shares so purchased shall be and be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant is exercised.
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(b) In lieu of the cash payment set forth in Section 2(a) above, the Holder shall have the right ("Conversion Right") to convert this Warrant in its entirety (without payment of any kind) into that number of Shares of Common Stock equal to the quotient obtained by dividing the Net Value (as defined below) of the Shares by the Fair Market Value (as defined below) of one share of Common Stock. As used herein, (A) the Net Value of the Shares means the aggregate Fair Market Value of the Common Stock subject to this Warrant minus the aggregate purchase price; and (B) the Fair Market Value of one share of Common means the 5 day closing average price of the Company's Common Stock immediately preceding the conversion.
(c) Certificates for shares purchased hereunder shall be delivered to the Holder within a reasonable period of time after the date on which this Warrant is exercised.
(d) The Company covenants that all shares of Common Stock which may be issued upon the exercise of this Warrant will be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional share shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon the exercise of this Warrant, an amount equal to such fraction multiplied by the current Purchase Price at which each share may be purchased hereunder shall be paid in cash to the Holder.
4. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided however that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and provided further that upon any transfer involved in the issuance or delivery of any certificates for shares of Common Stock, the Company may require reimbursement for any transfer tax.
5. No Rights as Shareholder . This Warrant does not entitle the Holder to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant . This Warrant is exchangeable, upon the surrender hereof by the Holder at the above-mentioned office or agency of the Company, for a new Warrant of like tenor and dated as of such exchange. The Company shall maintain at such office or agency a registry showing the name and address of the Holder. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
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7. Loss, Theft, Destruction or Mutilation of Warrant . Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.
9. Adjustment and Termination .
(a) Early Termination on Merger, etc. If at any time the Company proposes to (i) merge with or into any other corporation, effect a reorganization, or sell or convey all or substantially all of its assets to any other entity in a transaction in which the shareholders of the Company immediately before the transaction own immediately after the transaction less than a majority of the outstanding voting securities of the surviving entity (or its parent) (a "Merger Transaction"), or (ii) effect a registered public offering of its shares, then the Company shall give the holder of this Warrant ten (10) days notice of the proposed effective date of the transaction and, if the Warrant has not been exercised by the effective date of the transaction, it shall terminate.
(b) Reclassification, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities or otherwise, change any of the securities to which purchase rights under this Warrant exist into the same or a different number of securities of any class or classes, the Shares of Common Stock for which this Warrant is exercisable shall thereafter be convertible into the kind and number of Common Stock or other securities or property of the Company or otherwise to which the Holder would have been entitled if immediately prior to such change the Holder had acquired the Common Stock for which this Warrant is exercisable. If shares of the Company's Common Stock or other securities purchasable hereunder are subdivided or combined into a greater or smaller number of securities, the Purchase Price under this Warrant shall be proportionately reduced in case of subdivision of shares of Common Stock or proportionately increased in the case of combination of shares of Common Stock. No adjustment on account of cash dividends or interest on the Shares of Common Stock interests or other securities purchasable hereunder will be made to the Purchase Price under this Warrant.
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(c) Notice of Adjustment . Upon any adjustment of the securities issuable upon exercise of this Warrant, Purchase Price for the shares, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of the Holder as shown on the books of the Company.
(d) Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock or other securities purchasable hereunder a sufficient number of shares to provide for the issuance of Shares of Common Stock or other securities upon the exercise of any purchase rights under this Warrant.
10. Miscellaneous .
(a) Issue Date . The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state.
(b) Restrictions . The Holder of this Warrant, by acceptance hereof, makes the representations of an Investor under Section 3 of the Purchase Agreement and shall confirm such representations upon any exercise of this Warrant. The Holder acknowledges that the securities acquired upon the exercise of this Warrant may have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.
(d) Notices . All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed to the Holder at its address as shown on the books of the Company or to the Company at its address of record.
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Each such notice, report or other communication shall for all purposes under this Warrant be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
Dated: June 1, 2010
CAVITATION TECHNOLOGIES, INC
By: /s/ Roman Gordon
Title: CEO
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:
________________________________________________________________________
whose address is ___________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number is: __________________
the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, will full power of substitution in the premises.
Dated: ______________, 20__.
Holder's Signature: ______________________________
Holder's Name: ____________________________
(Please Print)
Holder's Address: ______________________________
(Please Print)
____________________________
Signature Guaranteed: ____________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
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NOTICE OF EXERCISE
To: Cavitation Technologies, Inc.
10019 Canoga Ave
Chatsworth, CA 91311
(1) The undersigned hereby elects to purchase ______________ shares of Common Stock of (the "Shares") of Cavitation Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
(Print Name)
____________________________________
(Print Address)
____________________________________
(3) The undersigned confirms that the Shares are being acquired for the account of the undersigned for investment only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or selling the Shares.
_________________________________
|
_________________________________
_________________________________
|
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Exhibit 10.36
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. LENDERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
CAVITATION TECHNOLOGIES, INC.
PROMISSORY NOTE
$ 9,000.00 |
Los Angeles, California
|
1. Principal and Interest
FOR VALUE RECEIVED, Cavitation Technologies, Inc., a Nevada corporation (the "Company") hereby absolutely and unconditionally promises to pay to Anna Mosk (the "Lender"), or order, the principal amount of nine thousand dollars ($9,000) on or before July 6, 2010, without interest.
2. Repayments and Prepayments, Personal Guarantee .
a. All principal under this Note shall be due and payable on or prior to July 6, 2010.
b. The Company may prepay this Note at any time, either in whole or in part, without premium or penalty and without the prior consent of the Lender.
3. Events of Default; Acceleration .
a. The principal amount of this Note is subject to prepayment in whole or in part upon the occurrence and during the continuance of any of the following events (each, an "Event of Default"): the initiation of any bankruptcy, insolvency, moratorium, receivership or reorganization by or against the Company, or a general assignment of assets by the Company for the benefit of creditors. Upon the occurrence of any Event of Default, the entire unpaid principal balance of this Note and all of the unpaid interest accrued thereon shall be immediately due and payable.
b. No remedy herein conferred upon the Lender is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and in addition to every other remedy hereunder, and under the Purchase Agreement, now or hereafter existing at law or in equity or otherwise.
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4. Notices .
a. All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed (i) if to an Lender, at such Lender's address as the Lender shall have furnished the Company in writing) and (ii) if to the Company at such address as the Company shall have furnished the Lenders in writing).
b. Each such notice, report or other communication shall for all purposes under this Note be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation.
5. Miscellaneous .
a. Neither this Note nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by a signed statement in writing.
b. No failure or delay by the Lender to exercise any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other right, power or privilege. The provisions of this Note are severable and if any one provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, such invalidity or unenforceability shall affect only such provision in such jurisdiction. This Note expresses the entire understanding of the parties with respect to the transactions contemplated hereby. The Company and every endorser and guarantor of this Note regardless of the time, order or place of signing hereby waives presentment, demand, protest and notice of every kind, and assents to any extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person primarily or secondarily liable.
c. If Lender retains an attorney for collection of this Note, or if any suit or proceeding is brought for the recovery of all, or any part of, or for protection of the indebtedness respected by this Note, then the Company agrees to pay all costs and expenses of the suit or proceeding, or any appeal thereof, incurred by the Lender, including without limitation, reasonable attorneys' fees.
d. This Note shall for all purposes be governed by, and construed in accordance with the laws of the State of California (without reference to conflict of laws).
e. This Note shall be binding upon the Company's successors and assigns, and shall inure to the benefit of the Lender's successors and assigns.
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f. In no event shall the interest rate and other charges under this Note exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that a court determines that Lender has received interest and other charges under this Note in excess of the highest permissible rate applicable hereto, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the outstanding principal amount hereunder and the provisions thereof shall be deemed amended to provide for the highest permissible rate. If there is no outstanding principal amount under this Note, Lender shall refund such excess to the Company.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written.
CAVITATION TECHNOLOGIES, INC.
By:/s/Roman Gordon
Title:CEO
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Exhibit 10.40
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)
US $25,000
CAVITATION TECHNOLOGIES, INC
6% CONVERTIBLE REDEEMABLE NOTE
DUE DECEMBER 6, 2012
FOR VALUE RECEIVED, Cavitation Technologies, Inc. (the "Company") promises to pay to the order of the Prolific Group, LLC and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of Twenty Five Thousand Dollars Exactly (U.S. $25,000.00) on December 6, 2012 (" Maturity Date ") and to pay interest on the principal amount outstanding hereunder at the rate of 6% per annum commencing on December 6, 2011. The Company understands that of the $1,250 is being paid directly by the Holder to New Venture Attorneys, P.C. leaving the Company with proceeds of $23,750. Interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are 500 W. Silver Spring Drive, Suite K200, Glendale, WI 53217 payable at , initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This Note is subject to the following additional provisions:
1. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
3. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (" Act ") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted (" Notice of Conversion ") in the form annexed hereto as Exhibit A . The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The Holder of this Note is entitled, at its option, at any time after May 6, 2012, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the " Common Stock ") without restrictive legend of any nature, at a conversion price (" Conversion Price ") for each share of Common Stock equal to 65% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau Pink Sheets on which the Company's shares are traded or any exchange upon which the Common Stock may be traded in the future (" Exchange ") for any of the five trading days including the day upon which a Notice of Conversion is received by the Company, provided (i) such Notice of Conversion is delivered by fax or other electronic means to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time, or (ii) the trading day on which a Notice of Conversion is received by the Company provided such Notice of Conversion is delivered by fax or other electronic means to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time. The Conversion Price may be adjusted downward if, within 3 business days of the transmittal of the Notice of Conversion to the Company, the Common Stock has a closing bid which is 5% or lower than that set forth in the Notice of Conversion. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares
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issuable shall be rounded to the nearest whole share. The Company understands the Holder may need to issue to the Company's transfer agent an initial conversion notice to allow the deposit of the Common Stock, and that this initial conversion notice (or notices) shall have no actual bearing on the amount converted as between the Company and the Holder. The Holder will send the Company daily updated conversions based on its actual conversion and such conversions will be binding on the Company and the Holder.
(b) Interest on any unpaid principal balance of this Note shall be paid at the rate of 6% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares"). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
(c) At any time the Company shall have the option to redeem this Note and pay to the Holder 150% of the unpaid principal amount of this Note, in full. The Company shall give the Holder 5 days written notice and the Holder during such 5 days shall have the option to convert this Note or any part thereof into shares of Common Stock at the Conversion Price set forth in paragraph 4(a) of this Note.
(d) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.
(e) In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.
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5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.
8. If one or more of the following described "Events of Default" shall occur:
(a) The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or
(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall be false or misleading in any respect; or
(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note; or
(d) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or
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(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of ten thousand dollars ($10,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings, or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted voluntarily by or involuntarily against the Company; or
(i) The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;
(j) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board; or
(j) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 4 business days of its receipt of a Notice of Conversion.
Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall be accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.
If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then the Holder shall be reimbursed by the Company for its attorneys' fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
9. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
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10. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.
11. The Company represents that it is not a "shell" issuer and has never been a "shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a "shell issuer. Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder's counsel.
12. The Company will provide New Venture Attorneys, P.C., counsel for the Holder two (2) signed and undated resolutions for the issuance of 600,000 shares each and four (4) signed but undated resolutions for the issuance of 200,000 shares each for a total of 2,000,000 shares of the Common Stock of Company. New Venture Attorneys shall hold these resolutions and will not submit a resolution until (i) such issuance, along with the number of shares currently held by the Holder would not exceed 4.99% of the outstanding shares and (ii) the Holder notifies the Company that it desires to have the Company issue the shares to use as a collateral reserve. The Holder will send the Company a notice of conversion upon every conversion from this collateral reserve conversion showing the amount of principal and interest paid down and the number of shares converted as a result. Any shares remaining after the amounts due under this Note has been fully converted will be returned to the Company. The Holder may also use these resolutions to convert any other convertible debt instruments that are outstanding with the Company. The Holder may need to send the Company transfer agent and its broker an initial conversion notice for the total amount of the shares being escrowed so they may be deposited this initial conversion notice shall have no effect upon the actual shares being converted.
13. This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
Dated: __________________
CAVITATION TECHNOLOGIES, INC.
By:
/s/Todd Zelek
Title: Chief Executive Officer
6
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Note)
The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Cavitation Technologies, Inc. ("Shares") according to the conditions set forth in such Note, as of the date written below.
If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.
Date of Conversion: _____________________________________________
Applicable Conversion Price: _______________________________________
Signature: _______________________________________________________
[Print Name of Holder and Title of Signer]
Address: ______________________________________________
________________________________________________
SSN or EIN: ______________________________
Shares are to be registered in the following name: __________________________________________
Name: ________________________________________________
Address: ________________________________________________
Tel: ________________________________
Fax: _______________________________
SSN or EIN: __________________________________________________
Shares are to be sent or delivered to the following account:
Account Name: _________________________________________________________________
Address: ____________________________________________________________________
7
Exhibit 10.41
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)
US $30,000
CAVITATION TECHNOLOGIES, INC
6% CONVERTIBLE REDEEMABLE NOTE
DUE DECEMBER 6, 2012
FOR VALUE RECEIVED, Cavitation Technologies, Inc. (the "Company") promises to pay to the order of the Tripod Group, LLC and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of Thirty Thousand Dollars Exactly (U.S. $30,000.00) on December 6, 2012 (" Maturity Date ") and to pay interest on the principal amount outstanding hereunder at the rate of 6% per annum commencing on December 6, 2011. The Company understands that of the $1,500 is being paid directly by the Holder to New Venture Attorneys, P.C. leaving the Company with proceeds of $28,500 Interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are 250 E. Wisconsin Avenue, Milwaukee, WI 53202 payable at , initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This Note is subject to the following additional provisions:
1. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same.
No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
3. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (" Act ") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted (" Notice of Conversion ") in the form annexed hereto as Exhibit A . The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The Holder of this Note is entitled, at its option at any time after May 6, 2012, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the " Common Stock ") without restrictive legend of any nature, at a conversion price (" Conversion Price ") for each share of Common Stock equal to 65% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau Pink Sheets on which the Company's shares are traded or any exchange upon which the Common Stock may be traded in the future (" Exchange ") for any of the five trading days including the day upon which a Notice of Conversion is received by the Company, provided (i) such Notice of Conversion is delivered by fax or other electronic means to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time, or (ii) the trading day on which a Notice of Conversion is received by the Company provided such Notice of Conversion is delivered by fax or other electronic means to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time. The Conversion Price may be adjusted downward if, within 3 business days of the transmittal of the Notice of Conversion to the Company, the Common Stock has a closing bid which is 5% or lower than that set forth in the Notice of Conversion. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.
2
(b) Interest on any unpaid principal balance of this Note shall be paid at the rate of 6% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares"). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
(c) At any time the Company shall have the option to redeem this Note and pay to the Holder 150% of the unpaid principal amount of this Note, in full. The Company shall give the Holder 5 days written notice and the Holder during such 5 days shall have the option to convert this Note or any part thereof into shares of Common Stock at the Conversion Price set forth in paragraph 4(a) of this Note.
(d) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.
(e) In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.
5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
3
6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.
8. If one or more of the following described "Events of Default" shall occur:
(a) The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or
(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall be false or misleading in any respect; or
(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note; or
(d) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or
(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of ten thousand dollars ($10,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or
4
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings, or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted voluntarily by or involuntarily against the Company; or
(i) The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;
(j) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board; or
(j) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 4 business days of its receipt of a Notice of Conversion.
Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall be accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.
If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then the Holder shall be reimbursed by the Company for its attorneys' fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
9. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
10. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.
11. The Company represents that it is not a "shell" issuer and has never been a "shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a "shell issuer. Further. The Company will instruct its counsel to either (i) write a 144-3(a)(9) opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder's counsel.
5
12 This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.
13. The Company agrees to issue to the Holder 2,812,400 shares of Common Stock to hold in escrow against future conversions of this note as well as any other Company notes held by the Holder. The Holder may need to send the Company transfer agent and its broker an initial conversion notice for the total amount of the shares being escrowed so they may be deposited this initial conversion notice shall have no effect upon the actual shares being converted and actual conversion notices will be send on a daily basis to the Company from the Holder. These conversion notices will be binding on both parties. The shares will be broken into two certificates of 1,000,000 shares each and two certificates of 406,200 each. Shares which have not been converted will be returned to the Company.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
Dated: __________________
CAVITATION TECHNOLOGIES, INC.
By:
/s/Todd Zelek
Title: Chief Executive Officer
6
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Note)
The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Cavitation Technologies, Inc. ("Shares") according to the conditions set forth in such Note, as of the date written below.
If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.
Date of Conversion: _____________________________________________
Applicable Conversion Price: _______________________________________
Signature: _______________________________________________________
[Print Name of Holder and Title of Signer]
Address: ______________________________________________
________________________________________________
SSN or EIN: ______________________________
Shares are to be registered in the following name: __________________________________________
Name: ________________________________________________
Address: ________________________________________________
Tel: ________________________________
Fax: _______________________________
SSN or EIN: __________________________________________________
Shares are to be sent or delivered to the following account:
Account Name: _________________________________________________________________
Address: ____________________________________________________________________
7
Exhibit 10.42
SHARE ISSUANCE AGREEMENT
This Share Issuance Agreement ("Agreement") is entered into this 6 th day of December, 2011, by and between the Tripod Group, LLC ("Purchaser") and Cavitation Technologies, Inc. ("Company").
WHEREAS, the Purchaser and the Company have entered into a back end funding arrangement with respect to $60,000 of debt issued by the Company ; and
WHEREAS, Purchaser agrees that the Company shall have the option to "call" the back end notes issued by the Company through the cancellation of offsetting Purchaser Notes; and
WHEREAS, in exchange for this "call" option being granted to the Company; the Company hereby issues 200,000 shares of Company stock to the Purchaser, to be held in safekeeping by New Venture Attorneys, P.C., and to be released as set forth herein.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
TRIPOD GROUP, LLC |
|
CAVITATION TECHNOLOGIES, INC. |
BY: ______________________ |
|
BY: /s/Todd Zelek |
Title: ______________________ |
|
TITLE: CEO |
Exhibit 10.43
BETWEEN
DESMET BALLESTRA NORTH AMERICA INC. (DBNA) 450 Franklin Road, Suite 170 Marietta, GA 30067
Represented by Timothy G. Kemper, President
AND
CAVITATION TECHNOLOGIES INC. (CTI)
10019 Canoga Avenue
Chatsworth, CA 91311
Represented by Roman Gordon, CEO, hereinafter referred to as "the Borrower"
The following has been agreed:
The Lender grants the Borrower, who accepts, a loan under the terms and conditions listed below. The capital amount is US$ 75,000.00.
This agreement will come into force October 25, 2010 (Starting Date) and will end upon last payment on March 25, 2011. The funds borrowed will be sent to the Borrower on the Starting Date via check made payable to Borrower.
The loan is to be repaid at a rate of $25,000.00 per month starting ninety (90) days from Starting Date. If for any reason CTI and DBNA are not able to finalize a restated and amended collaboration agreement for Nano Neutralization, the remaining balance of loan is 100% payable upon demand. The funds are borrowed on an interest-free basis. Should the Borower be late in any payment, interest will be accrued on the late amount at a ten percent (10%) annually compounded rate.
AGREED:
Made in 2 copies at Marietta, Georgia, United States on 26 October, 2010.
The Lender
|
The Borrower
|
DESMET BALLESTRA NORTH AMERICA,, INC.
Exhibit 31.1
Certification
I, Todd Zelek, certify that:
1. I have reviewed this quarterly report for the period ending December 31, 2011 on Form 10-Q of Cavitation Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 10, 2012 |
/s/ T ODD Z ELEK |
|
Name: Todd Zelek
|
Exhibit 31.2
Certification
I, R.L. Hartshorn, certify that:
1. I have reviewed this quarterly report for the period ending December 31, 2011 on Form 10-Q of Cavitation Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 10, 2012 |
/s/ R.L. H ARTSHORN |
|
Name: R.L. Hartshorn
|
Exhibit 32.1
CERTIFICATION
I, Todd Zelek, Chief Executive Officer of Cavitation Technologies, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
The Quarterly Report on Form 10-Q of the Company for the quarter ended December 31, 2011 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 10, 2012 |
/s/ T ODD Z ELEK |
|
Name: Todd Zelek
|
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION
I, R.L. Hartshorn, Chief Financial Officer of Cavitation Technologies, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
The Quarterly Report on Form 10-Q of the Company for the quarter ended December 31, 2011 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 10, 2012 |
/s/ R.L. H ARTSHORN |
|
Name: R.L. Hartshorn
|
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.